TCAIS Insider

Texas Coalition for Affordable Insurance Solutions

February 23, 2006

Homeowners Deductibles: A Simple Way to Lower Your Premiums

The Texas Coalition for Affordable Insurance Solutions recently launched a consumer education campaign to encourage Texans to take advantage of the growing insurance marketplace by shopping around for home and auto insurance. Insurance reforms designed to promote competition in the homeowners and auto insurance marketplace are working and Texans have more reason to shop for insurance than ever before.

TCAIS is committed to providing information to help Texans make wise decisions about their insurance needs. This month, we continue with some insurance basics.

Increasing Your Deductible Could Lower your Homeowners Premium

Did you know that increasing the amount of your homeowners insurance deductible could lower your homeowners premium? If not, you’re not alone. More than 4 out of 10 Americans who have a homeowners policy do not understand the relationship between a deductible and a premium, according to a recent study by the Insurance Research Council (IRC). *

What is a deductible?
A deductible is the amount that the policy-holder pays toward a loss before the insurer assumes responsibility for the claim. As the amount of a deductible rises, the insurance premium declines.

How much can you lower your insurance premium by increasing your deductible?
By doubling your deductible, from $500 to $1000 for example, you can reduce your premium by as much as 25%.

Talking to your insurance company or agent about adjusting your deductible is one of the simplest ways to lower your homeowners insurance premiums.

Sincerely,
Beaman Floyd
Executive Director, TCAIS

* Insurance Research Council, “Public Attitude Monitor 2005: Homeowners Insurance Deductibles and Claims,” December 2005

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