There are all kinds of ways you can save money on homeowners insurance, but a new study by insuranceQuotes.com has found that one of the most significant ways is by adjusting your deductible.

Property insurance
Alexey Dudoladov, ThinkStock
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How much money can be saved by doing this? It depends on where you live, but New Jersey residents can save 7 percent annually by raising their deductible from $500 to $1,000, the 21st highest savings in the nation. If they raise their deductible from $500 to $2,000, homeowners in the Garden State can save 14 percent.

According to the report, North Carolina saved the most, 41 percent, followed by Rhode Island, Florida, Connecticut, Pennsylvania, Massachusetts and California. On the other hand, savings are minimal in Hawaii (4 percent), Indiana (6 percent) and Texas (6 percent). Such savings likely are not enough to justify the added expense of raising the deductible.

So, how does a homeowner decide whether or not to raise the deductible?

The general rule of thumb is that homeowners should set their deductibles between 0.5 and 1 percent of the home's value. While it may be tempting to save more money, it is not recommended that a homeowner raise the deductible to $3,000 or $5,000.

"The key here is to remember, the higher deductible means you've got to make that payment out of pocket. So, if you typically would have that amount in savings, that's terrific and you're a great candidate to raise your deductible," said Laura Adams, senior analyst with insuranceQuotes.com. "On the other hand, if you're not a good saver and you typically wouldn't keep that amount in savings, raising that deductible can be risky because you may not have enough money to make a claim that you need on your home."

Other ways to save on homeowners insurance include the following:

  • Don't file minor claims;
  • Bundle home and auto insurance policies;
  • Ask your agent about additional discounts;
  • Make sure you are not over-insured;
  • Shop around at various insurance companies.

"For consumers, the key is to find out exactly how much you could save. So, getting in touch with your insurance agent and let them tell you exactly how much you could save before deciding whether it would be worthwhile. If the amount scares you and you aren't sure it's an amount that you could pay out of pocket, then you may not want to raise your deductible, but if it's an amount that you usually keep in savings, then it may be a good idea," Adams said.

The average home insurance premium is $1,034, according to figures from the National Association of Insurance Commissioners.

Click here for more information on the report.

 

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