Use Deductible to Your Advantage
One of the best ways to reduce your premium is with a deductible. For most insurance policies, the insurer offers a deductible for the policy. A deductible is the amount of loss or damage you are willing to take responsibility for. For a standard policy, the insurer places an amount they feel is reasonable enough for you to take care of. If you are looking to lower your premium, then you could reduce the risk burden of the company by raising the deductible.
As good as this may seem, you have to be extra careful that you are able to afford this risk responsibility when it occurs. Raising your deductible count has a negative feedback if you are unable to pay for the damage or loss when it occurs. This would be better understood using an example.
Smith wanted to lower his premium on his homeowner’s insurance policyso he decided to raise his deductible. Since he had not had any major damage or repair, he felt he could raise his deductible to $5,000. 7 months down the line, he has one of his pipes broken and suffered a major pipe leak damage. After getting a contractor to come estimate the cost for repair of the property, the contractor gave his a cost of $4,750. While for most people, the insurance company would be notified, Smith couldn’t call them for assistance because he had raised his deductible to $5,000 barely 7 months ago. He had to struggle to find the $4,750 for repairing cost.