You’ve seen the commercials where a family saves hundreds of dollars by bundling their home and auto insurance with one company. But is it really that simple? In short, yes and no. Here’s a breakdown of how bundling your insurance can save—or cost—your money.
The Pros of Bundling
If you’ve ever shopped around for insurance, you’ve come across the option to bundle your policies. But what is it, and is it worth it?
What Is Bundling?
Bundling is simply the act of combining two or more insurance policies from the same company. The most common type of bundle is the home and auto bundle, but you can also bundle your life insurance, health insurance, and even pet insurance in some cases.
Most insurers offer a discount for customers who bundle their policies, which can range anywhere from 5% to 20% off your total premium. While the discount may not seem like much, it can add up to significant savings over time—especially if you stick with the same insurer for several years.
But isn’t about getting a discount on your premium. It’s also about convenience. When you have all your policies with one company, you only must deal with one customer service team, one agent, and one bill. That can save you a lot of time and hassle over the life of your policy.
And if you ever need to file a claim, you’ll only have to deal with one claim adjuster rather than multiple adjusters from different companies. That can make the claims process a lot less stressful—and who doesn’t need a little less stress in their life?
The bottom line is that your insurance policies can save you money and make your life a whole lot easier. So, if you’re shopping for new coverage, be sure to ask your agent about discounts. It could be just what you need to get the coverage you want at a price you can afford.
The main advantage of bundling your insurance is that you will usually get a discount for having more than one policy with the same company. The amount of the discount varies by company, but it’s typically between 5 and 20 percent. In some cases, the discount may be even higher.
For example, Travelers offers a 25% discount for your home and auto insurance, and Hartford offers up to a 37% discount. Given that the average cost of homeowners insurance is $1,228 per year, according to the Insurance Information Institute, a 20% discount would save you $246 per year on your premium.
The Cons of Bundling
Even though you may get a discount for your policies, which doesn’t mean it’s always the cheapest option. The best way to find out if bundling makes sense for you is to compare the cost of your bundled policy with the cost of buying separate policies from different companies. To do this, you’ll need to get quotes from both bundled and non-bundled policies.
1. You might not actually save that much money.
While your insurance policies can sometimes lead to a discount, this isn’t always the case. Sometimes, the insurer will just give you a “bundling discount” that’s smaller than the discounts you would get if you bought each policy separately. Make sure to do your research and compare prices before you decide whether to combine.
2. You might not need all the coverage.
When you bundle your insurance policies, you’re usually stuck with all the coverage in the package, even if you don’t need it all. This can lead to wasted money if you’re paying for coverage that you’ll never use. For example, if you bundled your auto and homeowners’ insurance and then sold your car, you’d still be paying for auto insurance even though you no longer need it.
3. It can be harder to cancel a bundled policy.
If you decide that you don’t like your combined policy or find a better deal elsewhere, cancelling the policy can be more difficult than cancelling two separate policies. This is because most insurers require you to cancel all the coverage in the bundle at once, rather than allowing you to keep one policy and cancel the other.
4. You might not get the best coverage for each type of insurance.
When insurers create bundled policies, they often put together types of insurance that may not have much in common. For example, they might combine auto and life insurance even though they’re two types of coverage with different risk levels. As a result, the coverage in each policy might not be as comprehensive as it could be if you bought a standalone policy from a specialist insurer.
5. It can be more difficult to make claims.
If something happens and you need to make a claim on your policy, it can be more complicated than making a claim on a standalone policy. This is because bundled claims often involve multiple types of coverage, which means dealing with multiple adjusters, paperwork, etc.
6. Bundling doesn’t always lead to discounts.
In some cases, buying two separate policies might be cheaper than buying a bundled policy from the same insurer. This is especially true if one of the types of insurance in the bundle has a minimal risk level. For example, if you’re young and healthy, your life insurance premiums will be low. In this case, buying a standalone life insurance policy would be cheaper than buying a policy that includes life insurance.
Bundling your insurance can save you money—but not always. To make sure you’re getting the best deal, compare the cost of a bundled policy with the cost of buying separate policies from different companies. Only bundle if the your policy is cheaper than buying separate policies. Otherwise, you’re better off sticking with separate policies.
If you want to discuss options for bundling your insurance coverage, please call us at 561-732-9305 our quoting hours are Monday through Friday from 8:30 AM to 5:00 PM. In addition, you can request a quote online. Please remember, We Handle All the Work, While You Save!
Robert Macoviak is the President of Oyer, Macoviak and Associates. Oyer, Macoviak and Associates is the oldest independent insurance agency in Boynton Beach and has been in business since 1953. Oyer, Macoviak and Associates are vested members of the community who are committed to doing business face-to-face and being your insurance advocate in times of need.