More Than A Number

Many consumers think that purchasing insurance for a home with the lowest deductible is a smart idea, especially during these tough economic times. However, insurance professionals agree that keeping your out-of-pocket expenses low if you need to make a claim is not always a good idea.

For example, cheap home insurance with lower deductibles have higher premiums. In addition, “making a series of small claims may work against you in the long run if you’re costing the insurance company more than you’re paying in premiums,” says Vickie Bajtelsmit, chair of the Department of Finance and Real Estate at Colorado State University, in an interview with MoneyWatch.com. “Claims definitely increase the chance of your premiums increasing.”

Instead, when getting a home insurance quote, tell your agent to increase your deductable and ask for a claim-free discount. According to the article, raising your deductible from $250 to $1,000 could save as much as 25 percent on your premiums.