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Money is still tight for many Americans, meaning most are always looking to save when and where they can. Some people have even turned to their insurance policies as a place to cut costs. Insurance can be expensive, but consumers need to carefully ask themselves where and how they can save money in this area without jeopardizing the protections offered by their coverages.

Two typical places that many insured individuals think they can cut the cost of their premiums are from reducing the dwelling/liability limits on their homeowner's policy and reducing the liability limits on their auto insurance policy.

In reality, cutting the liability limits on these policies leaves you highly vulnerable to risk and will not ultimately save you any money over the long run. While you might save a few dollars now with such tactics, it isn't worth it when you stop to think about just how much you could lose if you were sued after someone was injured in your home or by your vehicle.

If you want to decrease your premiums, a much more prudent way to do it is by increasing the deductibles in your auto and home policies. A deductible increase from $250 to $500 could save you up to 15% on your homeowner's insurance premiums. You can save 30% or more on your premiums by raising the physical damage deductible on your auto insurance policy to $500 or $1000.

Some consumers get nervous about not having the $500 to cover their newly raised deductible should they need to file a claim. Since the situation doesn't involve thousands of dollars in difference, it's likely to be just as difficult for most people to come up with $500 as it would be $250. The only difference will be that the extra premium savings can be saved and set aside to cover the higher deductible from any future claims. In most cases, the additional $250 could be saved in less than 24 months.

If you're nervous about taking the larger leap to a $1000 deductible, then you can always take a slow and steady approach. You might increase your deductible to $500 first. You can open a savings account for the premium dollars you'll save each month from having a slightly higher deductible. Although it may take some time, you can eventually raise your deductible to $1000 when you have saved $500 to $750 in the account.

Unlike lowering limits, deductible raises can save you money without placing you at greater financial risk.