Insurance consumers constantly look for ways to save on their personal lines insurance costs. Some of these ways are smart, and some are not so smart.

Many consumers request reductions in the dwelling limits on their homeowners policy or the policy’s liability limits. Some customers even request reductions in liability limits on their auto insurance policies. In most cases, these types of requests are not wise.

We cannot stress enough how much you have to lose if a liability judgment goes against you — for example, in an auto accident or if someone is injured while at your home.

Increasing your property deductibles is a wiser way to save money on your insurance premiums. On a homeowners policy, going from a $500 to a $1,000 deductible (or a 1 percent of the dwelling limit deductible) may result in a savings of between 10 and 20 percent on the premium. These savings can be set aside to handle the higher deductible should a loss occur.

Higher deductibles on the physical damage section of your auto insurance are also an excellent way to save money on the premium. A $500 deductible on both comprehensive and collision can save you up to 30 percent on these coverage lines, and a $1,000 deductible would result in even more significant savings.

Another advantage of higher deductibles is that you will handle more minor losses independently, increasing the chances of a pristine loss record. This type of clean record can result in lower insurance premiums.

Lastly, with more “skin in the game,” you will be more likely to practice safe driving and keep your home in tip-top shape. Switching to higher deductibles is a much smarter risk management choice than reducing coverage limits.

Source: International Risk Management Institute, Inc. Copyright 2015

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