Pros and Cons of Bundling Car and Home Insurance
If you are in the market for both car and home insurance, you might be wondering if you can save money by bundling both together. It sounds like a great deal—you get the simplicity of only having to work with one insurance company and agent coupled with the cost savings that come from the bundling discount.
But while it sounds like a no-brainer, you shouldn't put your brain away just yet: The choice of whether or not to bundle your insurance should not be made lightly. Although most companies offer discounts for bundling insurance, there are numerous other factors you should consider other than the bundling discount before you switching up your car and home insurance or choosing a new provider.
You'll want to determine if you really will save any money, and note any deviations from your current coverage. Then, you should shop around for the best coverage and price for your situation—and work with the providers to ensure your coverage meets your needs.
What Is Bundling?
Bundling insurance is when you choose to buy several insurance policies from the same provider. This may include your home insurance, car insurance, life insurance, and more. Rather than having several different insurers for each policy, you use the same one. This may make it easier to pay premiums every month or save money, since many companies offer discounts for having multiple policies with them.
Pros of Bundling Car and Home
The bundling discount is an obvious advantage and probably the reason most people consider bundling in the first place. If you choose to bundle your insurance, you will generally save up to 25% in premiums. Having both policies together with one insurance carrier is one of the best discounts available.
If you bundle your insurance, then you will likely only have one deductible to meet for both insurance products. This can sometimes (but not always) mean a lower overall deductible then you would have if you didn’t bundle your insurance.
There is an app for everything—including your car and home insurance. If you bundle both policies, you will generally only need to download (and learn to use) one app for both policies. This will allow you to quickly check all your policies, make claims, and pay premiums from the same place.
If you have too many claims on your home or car insurance, your insurer could drop you—but they are less likely to do so if you are a client in both their home and auto divisions. It’s not a good idea to rely on this, but it could be advantageous.
Cons of Bundling Auto and Home Insurance
If you are focused on the discount you are receiving, you might not spend as much time comparing prices elsewhere—which is advantageous to the insurance company, but not to you. Make sure you research the costs of policies before you start looking into bundling discounts to save the most money. It may be possible to find multiple providers with the same coverage and lower prices, which could add up to less than a bundle with one company would cost.
If you have decided to bundle your car and home insurance, you it is possible to save on premiums—at least at first. This happens because bundling, by design, only works when you avoid shopping around.
Some companies strive to build loyalty, which means you'll continue receiving a discount. However, you’ll be less likely to shop around for a new insurer, which means that the company can slowly raise your premiums without losing your business.
Sometimes, you won’t be bundled in the same company, but with an affiliate company. This is known as fake bundling. It might still give you the discount, but it will reduce the convenience of having everything under one roof (and under one app).
Before You Bundle Home and Auto Insurance
Staying on top of your insurance costs while making sure you have the best insurance policy is work, and is a reason most people don't bother with shopping when it's time to renew. You can consider these points to help you decide:
- Do your own research to determine the coverage you need. Paying for more than you might ever require wastes money.
- Make sure to do your price shopping for premiums before you make your bundling discount comparison. This is where you will save the most money.
- Know exactly what you are getting. If you do not want your insurance bundled through an affiliate, say so, and make sure you understand whether that will be happening.
- Reevaluate every so often. Your loyalty to the company you buy insurance from should not increase just because you have two insurance policies and pay them more money—do your price shopping every few years and reevaluate the relationship as needed.
The Bottom Line
Choosing an insurance provider and bundled insurance is not a marriage; it's a business relationship, and the only things that matter are the coverage you receive and the premiums you’re paying—and there is nothing that says you should work it out with your insurance provider if the relationship is not working for you.
Allstate. "Allstate Insurance Bundles and Discounts." Accessed June 16, 2020.