Make 1 Call, Ask 2 Questions, and You Can Save Up to 30% on Insurance

The higher your insurance deductible, the lower your premium. But it can be a risky move. Here's how to ask, to see if it'll work for you.


Welcome to Day 17 of our 30-Day Easy Money Makeover! Every day in April, we’re bringing you strategies to help you improve, and feel more confident about, your money situation. Follow along and see the rest of the calendar here .

Yesterday, we encouraged you to go back and price compare your home and auto insurance policies to see if you could get a better deal on coverage. It’s a move that could save you hundreds of dollars a year.

Now we’re going to ask you to make one more call to your agent, to ask two questions that could help you save even more:

What would my rate be if I raise my deductible?

The higher your deductible—that is, the portion of a claim you’re responsible for before an insurer will chip in—the lower your premium. So if your deductible is $250, raising it to $500 will cut your bill. Jacking it up to $1,000, or higher, will save you even more.

Typical savings range from 5-10% on home policies, and 15%-30% on auto, says Loretta Worters, a spokeswoman for the Insurance Information Institute.

“[Your agent] can very easily tell you what the percentage of savings is going to be for raising that deductible,” she says.

Potential savings depend on factors like your age, city, and driving record, says Kevin Lynch, an academic instructor at The American College of Financial Services in Bryn Mawr, Pennsylvania. Drivers who are already earning a favorable rate are likely to see less in savings.

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Take Lynch’s own example: The 68-year-old professor, who hasn’t had a moving violation or accident in more than 40 years, recently asked about the deductible on the policy covering his older vehicle. Raising it from $250 to $500 would have saved him just $26 a year.

“It made no sense,” he says. “It didn’t save me any money…and if something happens, I have to pay an extra $250? No thanks.”

And there’s the catch of raising your deductible.

Should something happen, that deductible is money you’ll have to shell out, Worters says. Coming up with $400 is a stretch for 4 in 10 Americans, according to the Federal Reserve. If going from $250 to $500 would be a financial strain, the risk of a $1,000, $2,000, or $5,000 deductible isn’t likely to be worth it.

“You have to be financially comfortable with what that’s going to be,” she says.

Her tip: If you do decide to boost your deductible, aim to bank any savings you get from that move. That way, the money becomes an extra safety net for unexpected expenses.

What would my rate be if I change my payment schedule?

Paying your insurer on a monthly basis results in the biggest bill. You'll pay somewhat less if you can afford to hand over three months' worth of payments at a clip, or six months' worth, or a full year.

"If you pay your premium semiannually or annually, you will pay a lower premium," Lynch says.

Typical savings run $3 to $5 per month. It's not a lot, but in combination with other smart insurance moves, he says, it can add up.

(If you decide to switch carriers between those lump-sum payments, don't worry. You'll get a prorated refund, Worters says.)

This tactic can be a stretch at the outset, but it may be worth keeping in mind as a savings goal or for the next time you get extra cash—like your tax refund.

"You could put it toward your insurance and be done for the year," she says.

Check out Why using pretax health savings will keep more money in your pocket via Invest in You with CNBC + Acorns.