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6 states where you can easily save $200+ on homeowner’s insurance

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2015-06-04

Average savings homeowners get by raising deductible from $500 to $2,000.

 
Making one simple move — raising your homeowner’s insurance deductible — could yield hundreds of dollars a year in savings each year for residents of certain states.
According to a study released Thursday by InsuranceQuotes.com, raising your insurance deductible from $500 to $2,000 could lower your annual premiums by nearly 16% nationally — an average savings of more than $160 each year — and 20% or more in six states; raising them to $1,000 from $500 would save you 6% (or roughly $60 a year) on average and more than 10% in five states. The study looked at data from many of the largest homeowner’s insurance carriers in each state, representing roughly 60%-70% of the market share in each state; the dollar figures were calculated using additional data from the National Association of Insurance Commissioners.
How much you save per year on homeowner’s insurance by raising your deductible varies widely from state to state. States where you can save the most money by raising your deductible from $500 to $2,000 include Florida at an average savings of $484 a year (23%), North Carolina $376 (41%), Rhode Island $316 (26%), Connecticut $252 (22%), Massachusetts $232 (20%) and Oklahoma $222 (15%). States where you can save the least include Hawaii at $43 (5%), Indiana at $50 (6%), Idaho $57 (11%), Delaware and Oregon each at $69 and 10% and 12%, respectively.
Of course, if you have to file a homeowner’s insurance claim and have to pay that higher deductible out of pocket, those annual savings can be quickly eaten into. But since fewer than 5% of homeowners file claims in a given year, according to the Insurance Information Institute, raising your deductible and realizing the savings from that is a gamble that can pay off. “My advice: raise your deductible so you can get lower premiums every single year” — assuming you have enough savings to cover that deductible, says Laura Adams, InsuranceQuote.com’s senior analyst. “The savings could be substantial.”
What’s more, keeping your low deductible and then filing small claims that are only slightly above it could raise your rates, so many experts advise you to pay out of pocket for those anyway. “Having a low deductible and making a claim for a small item, such as a baseball through a window, may cause unintended consequences that result in greater expenses (from increased premiums) later,” says Andy Tilp, a certified financial planner and president of Trillium Valley Financial Planning in Sherwood, Ore. (Another study by InsuranceQuotes.com found that homeowners who had filed even a single claim in the past 12 months saw their rates jump an average of 9% nationally, with average rate hikes varying from 32% in Wyoming to 2% in New York.)
That’s why Tilp recommends raising your deductible and then putting the savings you get on the premiums toward further building up an emergency fund, or if you already have that, buying an umbrella liability policy so you have greater liability coverage should someone get hurt on your property.
Raising your deductible doesn’t make sense for all homeowners, particularly those in certain states who won’t see much savings at all, and others who simply don’t have the savings to pay a higher deductible should something happen to their home.