My wife freaked out when our insurance agent called for us to renew and told her that we don’t have earthquake insurance. So I go in to see the agent to negotiate the earthquake insurance.
With my regular policy having gone up as well (as it does every year), I ask " Is there any way we can cut the premium down ?." Before the earthquake insurance, the new annual premium was $510.
Well it turns out that if we raise the standard $500 deductible to $1000 I will save $76 on my premium.
Whaaaaat??? I’ve been paying $76 annually for 29 years to save $500 in case of a catastrophe? What a ripoff ! Oh well. It was a good thing my wife made me get that earthquake insurance.
I thought maybe some of you might want to check this out for yourselves.
This also applies to car insurance. Raising your deductible can save you a bunch of bucks.
A $1,000 deductible is often less than 1/2 the annual premium of a $100 deductible.
So all you dopers out there, check your deductibles on your auto insurance. Send one-half of the savings to me.
Be aware that some lenders will impose maximum deductibles - on car loans, a $500 deductible is a common limit. I don’t think there’s usually any such restrictions on homeowner’s insurance.
It’s actually a trade-off. You’d save bux on the premiums every month but if you needed to file a claim, you may be hard-pressed to come up with the deductible. Most of the time, I recommend $500. It’s a good happy medium between affordability of premiums and affordability of deductibles. Of course, if you own your car outright and it’s a pretty old one anyway, you may want to drop comp and collision and just stick to liability.
I’m with the OP on homeowner’s deductible. $500 is just too expensive and it practically begs you to file piddly claims that will get your policy yanked out from under you. Go much (any) higher than $1,000 though and the savings is usually negligible.
My take on car insurance is a bit different. If I had to I doubt I could shit $500 to get my car fixed unexpectedly. $250 would hurt, but I could probably do it. I can budget for the monthly cost of the insurance, but I smply can’t be relied on to raise my deductible and keep the difference in a savings account until I need it.
Since we’re talking insurance, check out the costs of liability insurance. Anything less than 50/100/50 is silly risky, higher limits than that are stunningly cost-effective.
My current insurance agent recommends setting your deuctibles to the maximum your could come up with “RIGHT NOW!!” if you had to. Since I have two credit cards with pretty high limits (12K and 18K) and low balances, I usually set my deductibles to $1000.
