Bundling Insurance: Is it worth it?

“Bundle your insurance and save!”: It’s a popular hook that you’ve probably heard over and over again in advertisements for various insurance companies, but what does it mean? Most insurance companies give you the option of bundling your insurance policies into one. For example, by bundling insurance, you would have auto insurance and homeowners insurance from the same insurance company. 

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A lot of times, this offer is made with the promise of big savings for bundling. Usually, insurance premiums can be paid together in one quick and easy sweep.
While bundling can be convenient, how much money does it really save in the long run? In this article, we will discuss the pros and cons to bundling insurance so you can decide if it’s the right choice for you. 

How bundling insurance can save you money

Insurance companies that have bundling as an option will usually offer a bundling discount of anywhere between 5 and 25%. Since your house is likely more expensive than your car, you will probably get the biggest discount on your home insurance.

Now days, insurance companies are not looking to only sell homeowners insurance. Rather, they are more often than not, in the business of trying to sell you different types of insurance. Overall, insurance rates for home insurance have gone up quite a bit over the last few years, which is what makes an insurance bundle look so appealing to homeowners.
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Basically, if you get your car insurance and homeowners insurance from the same insurance carrier, you will probably receive a 10% discount on your auto policy and 15% on your home insurance policy. 

Different companies will obviously have different insurance rates and bundle discounts, but generally you will get a larger discount on home insurance than you will on renters insurance. For example, if renters insurance and auto insurance are the two types of insurance that you are planning on bundling, you might get up to a 5% discount on your insurance policies. 

Pros of bundling auto and home insurance

If you’re considering bundling your insurance but want a run-down of what’s in it for you, here are some of the reasons why bundling insurance can be a good idea:

  • You will get a bundling discount: This is probably the main reason why policyholders consider bundling in the first place. Bundling can usually save you anywhere from five to 25% on your insurance premiums.
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  • You’ll only have to deal with one insurance company: If you get both of your insurance policies with the same carrier, you’ll only have to worry about one app or website every month when it’s time to pay the bill. When you want to check up on insurance claims or anything else related to your insurance needs, you can do some all from the same place with the same login information.

  • You’ll only have one insurance agent: If you choose to bundle your insurance, you will likely only need to correspond with one insurance agent, which is cool if you have established a good relationship with them. 

  • Your chance of being dropped decreases: Sometimes, if you have too many insurance claims on your home or auto insurance, this could lead to your insurance company dropping you. However, this is a lot less likely to happen when you have more than one policy with them. 

  • You will probably have a single deductible: When you have multiple policies with the same insurance carrier, it’s highly likely that you will only need to pay one deductible for both insurance products. In most cases, this can end up being a less expensive deal than it would have been had you not bundled your insurance. 

The cons of bundling auto and home insurance

Like most things in life, if there are pros, there are also cons. Bundling insurance can be beneficial in some respects, but here are the drawbacks:

  • You will be less likely to shop for cheaper deals: Once you get comfortable in a bundled insurance deal, it’s hard to keep your options open. The problem with this is that sometimes the discount we are receiving isn’t actually as good as we might think it is. For example, you might be benefitting from a multi-policy discount with your current company but missing out on a significantly cheaper car insurance rate elsewhere. In some cases, it ends up being cheaper to hold policies from two separate companies, but you won’t know this unless you shop around.

  • Insurance premium creeps: Bundling always saves you money in the beginning, but there’s no guarantee that your insurance company will hike their rates at some point or another. This is because the appeal of bundling is designed to be convenient and comfortable.
    This means that if rates can increase without you even noticing. J.D. Power, a company that monitors customer service by car insurance companies, found that a little under half of all policyholders who bundled their insurance have plans to definitely renew their policy.
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    Agreeing to definitely renew your insurance policy before even knowing if cheaper rates exist elsewhere or if your current rates will increase isn’t the best way to handle the situation. If you’re going to bundle, it’s best to stay open-minded and shop around before deciding to renew.

  • Beware of fake bundling: In some cases, you might receive insurance quotes form an agent who is pitching you a bundle, when in reality, they are setting you up with a policy from an affiliated company. While you will still get the discount, you will miss out on the convenience of having everything all in one place.

What to do before bundling

As you can see, there are a lot of things to consider if you are planning on bundling insurance. It takes patience and persistence to stay on top of changing rates and deals from other insurance companies. So, before choosing to bundle, keep these things in mind:

  • Shop around for insurance premiums before comparing bundling discounts. 
  • Ask a lot of questions and pay attention to what you are being offered. If your insurance agent mentions an affiliate company and that’s not what you want, speak up. 
  • It’s easy to stay loyal to a company who has given you convenience and a multi-policy discount, but every now and then, reevaluate your rates. Just because you have been insured by the same company for a certain amount of time doesn’t mean that the prices will stay the same. Every year before it’s time to renew, shop around for different options. It’s also a good idea to do this after a major life event like a divorce or a marriage.