Bundling Car and Home Insurance: Pros and Cons
If you are in the market for both car and home insurance, bundling might sound like a great deal—you get the simplicity of only having to work with one insurance company coupled with the cost savings that come from the bundling discount.
But while it sounds like a no-brainer, don'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, there are numerous other factors to consider other than the bundling discount before switching up your car and home insurance or choosing a new provider.
You'll want to determine if you really will save 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.
Multiple Policies in One Household
Multiple policies in the same household are also eligible for a multi-policy discount. For instance, a teen driver in the house with a separate auto policy is often eligible for the parent's home multi-policy discount if insured through the same insurance carrier. Verify this discount with your insurance provider.
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 could save up to 25% in premiums. Having multiple policies with one insurance carrier is one of the best discounts available.
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. 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.
You might be able to get the multi-policy discount on a policy in advance. For example, if you switch your auto insurance to a new carrier but want to switch your home policy when it renews, let your new carrier know about the future switch—as long as you commit, you might get the discount before the switch.
What Else Can You Bundle?
In more traditional companies, you will likely only get a multi-policy discount on your auto insurance policy if you combine it with a home policy. This sort of policy can be a renter's policy or home policy, but a traditional home policy usually has the most significant effect on your car insurance rate.
Boat insurance and RV insurance can also get you a multi-policy discount if combined under the same insurance provider as your auto and home.
Some insurance companies offer more bundling options than others do, and if you look hard enough, the possibilities are endless. You may be able to get a multi-policy discount on snowmobile or ATV insurance, or even insurance on your golf cart or segway.
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.