Home Insurance Deductible Savings Vary by State

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How much money you stand to save by increasing a homeowners insurance deductible depends on the state you call home.

A new study from InsuranceQuotes.com shows a wide range of savings — from 1.87 percent to 44.93 percent — that is based on your state and the amount of your deductible increase.

Generally, increasing your deductible — the amount you must pay out of pocket for a claim before insurance coverage kicks in — lowers your premium payments.

David Reiss, a law professor at Brooklyn Law School, tells InsuranceQuotes.com:

“A higher deductible is a signal to the insurance company that the homeowner is less likely to file claims because they are agreeing to a higher threshold for doing so. And the less likely you are to make a claim, the lower your premium is going to be.”

For its study, InsuranceQuotes.com commissioned Quadrant Information Systems, a property and casualty insurance analytics firm.

The findings show the national average savings on premiums for a two-story home covered for $140,000 are:

  • 7 percent for increasing the deductible from $500 to $1,000
  • 16 percent for increasing the deductible from $500 to $2,000
  • 28 percent for increasing the deductible from $500 to $5,000

In North Carolina, however, increasing that same deductible to $5,000 yields an average savings of 44.93 percent — the greatest amount of savings in any state, the study found.

The states whose homeowners stand to save the most on their premiums by increasing their deductibles to $5,000 are:

  • North Carolina
  • Oklahoma
  • Rhode Island
  • Nebraska
  • Pennsylvania

Mike Barry, spokesman for the nonprofit Insurance Information Institute, points out that states where homeowners stand to save the most by increasing their deductible tend to have a very high risk for natural disasters like hurricanes and tornadoes. He tells InsuranceQuotes.com:

“If you’re living in a state with a significant number of natural disasters and you, as a policyholder, are willing to absorb more of the risk with a higher deductible, your insurer is going to give you a more substantial break in your premium.”

To find out how your state ranks for potential premium savings, check out InsuranceQuotes.com’s chart of the study findings.

For help lowering the costs of your own homeowners — or auto or motorcycle — insurance, visit our Solutions Center.

Has increasing an insurance deductible help you save money? Let us know below or on Facebook.

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