Everyone hates to pay insurance premiums because they have much better things to spend their money on. Their children can be very expensive, and they also have other things that are generally more important to them, things such as grocery bills, tuition, good things like that. 

So here are a few easy ways to reduce your premiums. The one that most people miss is increasing their deductibles.

What Is A Deductible?

Let’s say you’ve been involved in an accident, and let’s say there’s going to be a payout for your property damage. You will be responsible for a certain amount of that, a certain dollar amount, and that’s your deductible. It’s the amount that’s deducted from what the insurance company pays. 

Most people like to keep their deductible low so that they don’t come out of pocket. I say that’s a bad idea. The reason why is because depending on your circumstances, you might want to consider increasing your deductible. 

How Increasing Your Deductible Can Save You Money

Consider how many people you have in your home that are covered under the policy, and how many miles each of them drives in a given year. You can assess all of that and determine whether or not an increase in your deductible is a good idea.

Now, why would anybody want to do that? Insurance companies are going to make their money, one way or the other. If something goes up, another thing goes down. The same thing holds true when it comes to the relationship between your deductible and your insurance premium. 

What You Should Do

Take pen to paper and do the math, and see if you think increasing your deductibles is a good idea. So when you’re going to buy insurance or even if you have a pending policy right now, call your insurance agent. 

Ask them, “Now, my deductible is $250. What if I go up to $500? What if I go up to $1,000? What if I go up to $2,500?” Then make a decision depending on what you can afford, under your circumstances, if something bad happens. 

You may be astounded to find out that doubling your insurance deductible from $250 to $500 may reduce your annual premiums by $2,000. So if you can go a year without any casualty losses or accidents, those savings are going to go right into your pocket.

I would suggest you do that and see how high you can get that deductible to where it’s comfortable for you and reduces your premiums in a meaningful way. If you have any questions, please write me at chip@cosselaw.com. I’ll be happy to answer any of your questions.