Like your car insurance, you may be able to find significant savings on your homeowners insurance policy by raising the deductible on your insurance. Many homeowners have their deductibles set at the starting price of $250. So, if they file a claim, the insurance company would pay the claim after the homeowner paid the first $250 in repairs. When insurance deductibles are set so low, the bulk of the risk is on the insurance company’s shoulders. In response to baring most of the risk, the insurance companies naturally raise the homeowner’s premium prices.

One way to significantly lower your homeowners insurance premium is to raise your deductible amount. You should consider raising your deductible to either $500 or $1,000. If you can raise your home insurance deductible to those levels, you could enjoy large discounts on your premiums. Increasing your deductible from $250 to $1,000 could save you more than 25% or more on your premiums. So, for example, if a $200,000 home has an annual insurance premium of $800 per year, you could save more than $200. It would only take you five years to recapture the $1,000 deductible that you would have to pay out of your own pocket. While five years seems like a long time, consider how often you file a claim. You are far more likely to not file a claim over five years on your home than you are to file one for a car accident. This could be a great way to save on your costs. You could turn that cost savings into a way to pay down your mortgage faster by applying that amount to your principle instead.

You should also consider increasing your homeowners insurance deductible if you have an adequate emergency fund of three to six months of living expenses. In this case, you are essentially self-insuring $1,000 in repairs to your home with your own savings. The cost savings that you realize from increasing your insurance deductible can also be put toward building up your emergency fund.