These cost-conscious days, everyone is trying to save
money wherever they can, and that includes on their
insurance policies.

More customers are now requesting a reduction in the
dwelling limits on their homeowners policy or a reduction
in the policy’s liability limits. Some customers even ask to
reduce the limits of liability on their auto policies. In most
cases, these types of requests are not wise ones. We cannot
stress enough how much you have to lose if a liability
judgment goes against you—for example, in an auto
accident or if someone slips and falls at your home.

A better way to save than cutting coverage

A wiser and more consumer-friendly way to save money
on your insurance premiums is to increase your property
deductibles. On a homeowners policy, going from a $1000
to a $1500 deductible may result in a savings of up to 15% on
the premium. Some folks might say: “But if I have a claim,
I can’t come up with $1500 at one time.” The important thing
to remember is this: If your deductible is $1000 now, you’d
need just $100 more to meet a higher deductible of $500
should you suffer a loss—not a big amount. And remember,
with the premium savings you’ll realize, you’ll likely recover
that $250 in less than two years time.

Higher deductibles on the physical damage section of your
auto insurance are also a good way save. A $500 deductible
on both comprehensive and collision can save you up to 30%
on these coverage lines. A $1,000 deductible may result in
savings of up to 40%.

A graduated approach to lowering premiums

If you cannot take the big leap from a $250 deductible to
$1,000, consider a graduated approach. One option is to go
to a $500 deductible now and put the premium you save into
a “deductible fund.” Then in a couple of years, you’ll have
enough in that fund to increase the deductible to $1,000—and
thereby lower your premium even more!

Source: International Risk Management Institute