Many insurance companies offer the option to bundle your coverage and save money. However, before jumping at this opportunity, it's important to understand exactly what bundling your policies entails and whether it will actually lead to the savings and quality of service that you're looking for.
What ‘bundling’ policies means
Most insurance companies offer a variety of products. Big companies like Progressive, State Farm, Allstate and GEICO offer policies to protect your home, auto, rental property, motorcycle and more. In some cases, you can even purchase certain types of health insurance or life insurance plans from the company that is insuring your automobile.
Bundling your policies essentially means that you buy multiple products from a single company rather than purchasing policies from different providers. Insurance companies generally encourage this as it cuts down on competition and helps to boost their bottom line. For this reason, an insurer will usually offer a discount to customers who have multiple policies through their company.
Advantages to bundling your insurance
The primary reason to consider bundling your insurance policies is to benefit from cost savings. Different companies will offer different discounts, so the exact amount that you save will vary between companies. However, most companies do offer some sort of discount to drivers who choose to switch companies for one or more policies.
There are other benefits to bundling as well. For one, it is simpler to pay multiple premiums to a single insurer rather than keeping track of multiple different companies. This is especially true if you pay your premiums online as they can be easily paid together at one time in a single payment. This saves you the effort of visiting multiple websites, calling multiple companies or setting up multiple auto-pay agreements for your various bills.
It's also easier to keep track of multiple policies when all of the information is available through a single source. When you own multiple types of property, it can be difficult to remember what company is insuring which thing. Having all of your policies bundled under a single company's umbrella reduces your need to save multiple phone numbers and policy numbers.
Drawbacks to bundling your insurance
Although bundling your policies can be convenient, it's not always the best plan.
Part of the problem is that the discounts offered may not actually provide the most affordable coverage. Consider this example: You currently have auto insurance through Company A and homeowners insurance through Company B. You're paying $100 per month for auto coverage and $100 per month for homeowners. Company B would offer you a 10 percent discount on your homeowners insurance to switch. However, auto insurance through Company B would cost $150 per month. Thus, the $10 you save on homeowners insurance would not cancel out the extra money you'd have to spend on auto coverage.
This is a simplified example, but it represents the biggest problem with discounts. Unless you know what the base price of the coverage involved actually is, there is no way of knowing whether you're really saving money by switching.
Another issue with bundling your insurance is that not every company offers exactly the same products. For example, some companies include some coverage as standard that other companies include only as paid options.
Is bundling the right decision for you?
The best way to choose whether or not to bundle your insurance policies is to research your options thoroughly and compare the products and their prices. Not only will this help you to see how much money you might save, but also it can give you insights into the type of company you're looking at and whether it will be a good fit for your needs.
Things to look for when comparison shopping include:
- What discounts, if any, are offered. These include policy bundling, good driver, good student, loyalty and many other discounts.
- What the base price of a given policy is before the discount is applied.
- What coverage is included in the base price and how much it costs to add additional wanted coverage.
- How bundling discounts are calculated and applied. Are they based on the type and amount of policies bundled, a flat rate discount or some other factor?
You may discover through your research that bundling your policies can save you a significant amount of money. On the other hand, you may discover that keeping your policies separate or even bundling through a completely different company yields the best results.
When you're trying to save money on insurance, it's a good idea to shop around and keep an eye out for discounts and opportunities even if you already have coverage. Just because you have insurance with a particular company now doesn't mean that it pays to be loyal; you may find a great way to save money or even get better quality service and products by switching and taking advantage of a great deal.