insuranceQuotes.com examined three different scenarios for raising deductibles and how much each increase allows consumers to save on average. Nationally, raising the deductible from $500 to $1,000 will result in 7% savings; $500 to $2,000 will generate 16% savings; and from $500 to $5,000 will save policyholders 28% on their premium.
Savings veer wildly from state to state, however. In North Carolina, increasing the deductible from $500 to $1,000 generates more than 16% in savings, while residents of Texas and Wyoming save less than 3% after making the same move.
On average, residents in these nine states save the most when raising their deductible from $500 to $1,000.
- North Carolina – 16.38%
- Rhode Island – 14.02%
- Connecticut – 12.23%
- Massachusetts – 10.54%
- Nebraska – 10.15%
- Pennsylvania – 9.88%
- New York – 9.85%
- Alabama – 9.69%
- Iowa – 9.52%
North Carolina also tops states in terms of premium savings when upping the deductive from $500 to $2,000, saving 38.84%. And if North Carolina residents raise their deductible to $5,000, they would save nearly 45%.
The reasons for these regional differences are complex, and relate to exposure to natural disasters like hurricane and tornadoes, said Mike Barry of the Insurance Information Institute.
“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,” Barry told insuranceQuotes.com.
“What you do with your home insurance deductible should depend on where you live,” said insuranceQuotes.com analyst Laura Adams. “If there’s no significant savings, it may not make financial sense to increase your deductible. Be sure to review your coverage every couple of years to make sure your policy and insurance provider is still right for you.”
Raising the deductible on home insurance policies is a proven way to save on premiums when money is tight, though it isn’t always the best decision, a new state-by-state comprehensive study reveals.