Most people know and understand that you can lower the monthly premium on your Lake Minnetonka homeowners insurance by raising your deductible. But whether it makes sense to do so can vary.
The deductible is the amount of a loss you must cover out of pocket. The deductible for a Lake Minnetonka homeowners insurance policy typically ranges from $500 to $1,000, but may be as low as $250 or as high as $5,000.
An analysis done for an online insurance site found that raising a deductible to $2,000 from $500 lowers the average annual premium by a wide range, depending on where you are, anywhere from 6 to 40 percent.
For the analysis, the study was based on premiums for a two-story, single-family home insured for $140,000 (which is a price range that is a challenge to even find anywhere these days).
The catch of a much higher deductible, of course, is that you risk not having enough cash on hand to cover the deductible if you need it. Many Americans lack significant savings, so paying several thousand dollars to cover a major loss may be a stretch.
Homeowners with a robust emergency fund can afford to raise their deductible, but if you're living paycheck to paycheck, or if you're not a consistent saver, be careful. Plus, if you raise your deductible significantly, that means you’ll be responsible for more minor damage. You’ll be self-insuring for smaller losses.
Other Ways to Save on Lake Minnetonka Homeowners Insurance
Many insurers offer discounts if you buy multiple policies, like Lake Minnetonka homeowners and automobile coverage, or if you take steps to reduce risk, like installing security or sprinkler systems. Others may offer a discount if you have your premium automatically deducted from your bank account. So you should check with your insurance agent.
Also, according to the Insurance Information Institute, If you’re at least 55 years old and retired, you may qualify for a discount of up to 10 percent from some insurers (the rationale being that you’re probably at home more, so you may spot potential problems more quickly).
To get more information on Lake Minnetonka homeowners insurance and how premiums are calculated for different homes and different coverages, check out our other articles over in the Lake Minnetonka Insurance section under Lake Minnetonka Real Estate Categories.
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