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The Murphy Insurance Blog


News, updates and useful tips about insurance products and the insurance industry. We also provide insights on community events, local news and information that affect your everyday life. Enjoy!

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

Many consumers request reductions in the dwelling limits on their homeowners policy or reductions in the policy's liability limits. Some customers even request reductions in the limits of liability 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.

A wiser way to save money on your insurance premiums is to increase your property deductibles. 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. This 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 a good way to save some money on the premium. A $500 deductible on both comprehensive and collision can save you up to 30 percent on these coverage lines. A $1,000 deductible would result in even greater savings.

Another advantage of higher deductibles is that you will handle smaller losses on your own, increasing the chances of a pristine loss record. This type of clean record can result in lower insurance premiums down the road.

Lastly, with more "skin in the game," you will be more likely to practice safe driving and to make sure your home is 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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