I can’t even count the number of times I’ve heard homeowners say, “I’ve been paying my insurance for 10 years and haven’t filed a single claim!” Well that’s a good thing! Not filing a claim is probably the best thing you can possibly do to control the premium you pay every year.
Even after filing just one claim, the average annual premium in Minnesota went up 21% for homeowners. So if you’re going to self-insure to a certain point and avoid making the smaller claims (which would be my recommendation), then why are you paying all of that extra premium to carry such a low deductible? Raising your deductible even $500 to $1000 can sometimes result in hundreds of dollars a year in savings. If you’re the person who goes 10-12 years without filing a claim and raising your deductible saves you even $200 in premium a year, you’ve just pocketed over $2,000.
Now don’t get me wrong – your deductible should be a number that you could at least uncomfortably pay in the event of an emergency. But insurance exists to pay for the things that you can’t. Yes, $2,000 is an unpleasant amount of money to have to pay, but it doesn’t compare to the $200,000 you’d need to rebuild your home in the event of a total loss. Making a small claim in order to receive a mere $500 from the insurance company after your deductible is paid will cost you more than that in premium in as few as 2-3 years.
If we can adjust our philosophy about insurance so that it’s used primarily in the event of a catastrophe, there is a ton of savings to be had without jeopardizing the quality of your homeowner’s coverage.