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 doesn't it? 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 definitely should not 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 a ton of other factors you should consider other than the bundling discount before you switch your car or home insurance or choose a new provider.
The Pros Of Bundling Car And Home Insurance
- The Bundling Discount: This one is obvious and probably the reason you are considering bundling in the first place. If you choose to bundle your insurance, you will generally save five percent to 25 percent in premiums. Having both policies together with one insurance carrier is one of the best discounts available.
- Only One App: These days, 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 both policies, make claims, and pay premiums from the same place.
- Only One Agent: One of the few nice things about insurance happens when you can form a friendly relationship with your insurance agent. If you bundle your insurance, you might only have to balance one of these relationships, which is good if you like your agent!
- Less Chance Of Being Dropped: 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.
- A Lower Deductible: If you bundle your insurance, then you will likely only have one deductible amount to meet for both insurance products. This can sometimes (but always) mean a lower overall deductible then you would have if you didn’t have bundled insurance.
The Cons Of Bundling Car And Home Insurance
Discount Goggles: If you are focused in 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 to do your work researching the cost of policies before you start looking into bundling discounts to save the most money.
Premium Creep: If you have decided to bundle your car and home insurance, you will save on premiums – at least at first.
While you'll continue receiving a discount, you’ll also be less likely to shop around for a new insurer, which means that the company can slowly raise your premiums without losing your business.
This happens because bundling, by design, only works when you avoid shopping around.
A study by J.D. Power, a company that tracks the customer service of car insurance companies, found that 46 percent of those who have bundled their insurance say that they plan on definitely renewing their policy – which is never a good thing to say before you have done the math.
Beware The Fake Bundle: Sometimes, you won’t be bundled in the same company, but with an affiliate company. This 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: Staying on top of your insurance costs and making sure you have the best insurance policy takes work. Consider these points to help you along the way.
- 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. It’s not a marriage; it’s a business and the only thing that matters are the perks of the insurance company and the premiums you’re paying.