Insurance is one of those variable cost that almost everyone tries to find ways to bring down. All of the different types of insurance you need in life, from home insurance to car insurance to boating insurance, can really add up, which is why it can be nice to find a strategy that allows you to lower the cost of all your insurance polices that require a deductible.
How a Deductible Works
When you create your insurance policy, you need to choose a deductible to go with your insurance policy. When you have to cash in on your insurance policy, your deductible is what you have to pay before your insurance will kick in.
Most people naturally gravitate towards a lower deductible amount. A lower deductible amount means you will have to pay less in order for your insurance to kick in and help you after a car accident or after your house is damaged.
However, lower deductibles come at a big cost. The lower your deductible is, the more expensive your overall policy is. Raising your deductible can really lower your insurance premium.
Why Building Up Your Savings Account Will Save You Money
In order to have a high deductible, though, you have to be able to afford it, which is where the idea of building up your personal savings comes into play. It doesn't make much sense to raise your car deductible to a thousand dollars if you are not capable of paying that when you get into an accident. If you can't pay your deductible, you can't take advantage of your insurance. It will not matter that you had a lower premium, because you will have essentially been throwing your money away.
You need to have enough cash in your savings to cover all your deductibles as if you had to pay them tomorrow, which is why you need to start saving today.
To lower your insurance, start increasing your savings. When you get to the point that you can afford a $500 deductible, raise your insurance deductible to $500 and funnel the extra money you are saving into your savings account. When your savings account reaches $1000, raise your deductible to this point.
For car insurance, around $1000 is a good number for your deductible. For your homeowner's insurance, where the payouts can be higher, aim for a higher deductible.
Building up your savings will allow you to raise your deductibles for your insurance, and allow you to enjoy a permanent discount on your insurance premiums. For questions about options, contact a company like United Counties Insurance Group.