- Raising car insurance deductibles can significantly lower premium rates, depending on where you live, according to a new study commissioned by InsuranceQuotes.com.
- Increasing the deductible from $500 to $1,000 resulted in a national average premium reduction of 9 percent according to the study.
- The largest savings was found in Massachusetts, at 19.2 percent, while Michigan came in last, at 3.9 percent.
The study, conducted by insurance data analysts Quadrant Information Services, found that raising the deductible from $500 to $1,000 resulted in a national average savings of 9 percent. But some states saw much higher reductions, while in others the same adjustment had only minimal impact.
The largest difference was found in Massachusetts, with a 19.2 percent premium reduction. Other states with notable savings included South Dakota (14.3 percent), Kansas (13.4 percent), Wyoming (13.1 percent) and Iowa (13.0 percent).
The state with smallest savings was Michigan, with just a 3.9 percent premium reduction, followed by Florida (4.7 percent), Louisiana (5.9 percent), North Carolina (6.4 percent) and Nevada (6.4 percent).
"It's very interesting to see that in some states raising your deductible gives you a huge savings and in others it barely moves the needle," said Laura Adams, senior analyst for insuranceQuotes.com, in a statement. "In some states, you can save hundreds of dollars each year by signing up for a higher deductible, but in others, the reward is so small that it doesn't make sense to risk the higher deductible. This is a good reminder that doing a little research and knowing what's available to you can really pay off in the long run."
Michigan's position at the bottom of the list should come as no surprise. As previously reported by Edmunds, in addition to being a no-fault state, Michigan is the only state in the U.S. where car insurance includes unlimited personal injury protection.
InsuranceQuotes.com also noted that raising the deductible further still can result in even more savings, although again the amount depends on location. For example, by increasing the deductible from $500 to $2,000 residents of South Dakota could save 28 percent on their insurance premiums, and those in Massachusetts could save 27 percent.
Meanwhile, in North Carolina, a similar increase in deductible nets only a 6 percent savings, well below the national average of 16 percent.
Of course, as InsuranceQuotes.com points out: "Experts say there are hundreds of factors that go into how auto insurers set premiums, including state laws, claims history in the state, the individual company and the policyholder's characteristics, such as age, location and driving record."
Edmunds says: As always, when purchasing insurance and calculating risk, consumers are advised to do the math.