Q: My homeowners insurance premium jumped again this year, and I am trying to bring the bill down. I am thinking about lowering the coverage amount on my house and raising my deductible to save some money. Is that a smart way to cut the cost, or am I setting myself up for trouble? — Gerald

A: There is a right way and a wrong way to cut costs, and the two can feel almost identical when you are staring at a renewal notice. Raising your deductible is a reasonable way to lower your premium. Lowering the coverage amount on your house is not.

I want to walk you through the difference before you change anything, because one of these choices could quietly ruin you.

Your deductible is the portion of a claim you pay out of pocket before the insurance company pays the rest. When you raise it, you take on a little more risk, and the company rewards you with a lower premium.

Raising your deductible from $1,000 to $2,500 or $5,000 can save a meaningful amount each year. Just remember to keep that amount set aside in savings, because the day a pipe bursts or a storm takes part of your roof, you will need to pay it.

Be aware that if you have a mortgage, your lender will limit how much you can increase your deductible, typically to around 5% of your coverage amount. That ceiling exists to make sure a homeowner can still afford to rebuild after a loss.

The other idea is the one that worries me. The coverage amount for your home, called the dwelling limit, is not the price you paid or what the home would sell for. It is what it would cost to rebuild the house from the ground up at today’s prices for labor and materials. Those costs have risen sharply in recent years, which is a major reason your premium went up in the first place.

Lowering that number does reduce the premium, but it does nothing to make your house cheaper to rebuild. It simply shifts that difference onto your own shoulders.

Consider what that looks like after a real loss. Suppose your home would cost $400,000 to rebuild, and you lower your coverage to $300,000 to shave the premium. If a fire or a storm destroys it, the insurance company would pay only $300,000, leaving you to cover the remaining $100,000, all while you are still making mortgage payments on a home you can no longer live in.

Here again, the mortgage matters because your lender requires you to insure the home for close to its full replacement cost. In most cases, the bank will not permit you to lower the dwelling coverage as you are considering, and if your coverage lapses, the lender can buy a policy for you and charge you far more than you would ever have paid on your own.

Trim the premium, but trim it in the right place. Raise your deductible to a level you can genuinely afford, ask your agent about every available discount for a newer roof, storm protection, or combining your home and auto policies, and compare offers through an independent agent who represents multiple companies.

Reducing what you pay is sensible. Reducing what actually protects you is not

____

©2026 South Florida Sun Sentinel. Visit at sun-sentinel.com. Distributed by Tribune Content Agency, LLC.