Can you Save Money Bundling Insurance Policies?

November 12, 2019

You’ve likely seen or heard the advertisements. Bundle your insurance and save! But is it really the truth? If you get your homeowner’s insurance and car insurance from the same provider, do you really save that much money?

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In some cases, yes, you do save. But you have to know what to look for not only now, but in the future too.

Bundling Insurance Does Save Money

As a general rule, you can save as much as 25% bundling your car insurance. It makes sense since insurance companies can decrease their marketing budget when they get customers willing to bundle. Agents don’t have to work as hard to get more business, because they get an extra policy from current customers.

Insurance companies have to do less work too. If they can get two policies from one customer rather than one from each, that’s half the work they have to do. Your personal information doesn’t change, so writing and underwriting the policies is a lot less labor-intensive. The insurance company wins on this deal, which is why they offer a discount.

But, that discount is a lure. They reel you in with the attractive pricing, but that pricing doesn’t last forever. Enjoy the bundled discount initially, but have a plan for future years to avoid falling into the trap.

The Comfortable Trap of Increasing Pricing

Once you purchase policies, especially if you put both homeowner’s and car insurance with the same insurance company, you may get comfortable. You know you have good coverage, why ruin a good thing right?

Here’s where they get you. Suddenly, at renewal time, your premiums increase. You may notice or you may not. Initially, the jump typically isn’t too alarming. As the years go on, though, the premium continues to jump. Before you realize it, you are paying hundreds of dollars more every year for the same coverage.

This all happens because you are comfortable. Who wants to shop for two new insurance policies, right? That’s where the savings of bundling your insurance starts to dwindle.

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How do you Know if Bundling Makes Sense?

The only way to know if you’re really getting a deal bundling your insurance is to shop around. Yes, it defeats the purpose of bundling, but you’ll know if you are getting the best price possible. Check with other insurance companies both as a separate policy and as bundled policies. Sometimes ‘packaged deals’ aren’t quite what they seem. It sounds like you’re saving a good amount of money, but you may be paying for coverage you don’t need or not getting coverage that you do need.

You need to break it down. Really think about the type of coverage you need. Then look closely at the policy. Does it provide what you need? Do you have enough dwelling coverage for your home? Do you have the extra coverage you need for personal belongings or any special endorsements for special coverage?

What about the auto policy, do you have all types of coverage that you want including liability, comprehensive, and collision? Is the deductible one that you are comfortable affording should you need to use your insurance? Are you sacrificing anything in order to get the bundled discount?

Should you Bundle Your Insurance?

With the increasing rates and work involved in switching policies, does it make sense to bundle with the same provider? It can. You just need to be cognizant of the increasing premiums.

Always check the renewal premiums. It may not be fun to shop around for new insurance carries, but if the premium will increase significantly, you should shop around. You may find another insurance company that will bundle for significant savings again. You’ll save the hard work of finding two agents, but won’t overpay for your insurance.

Each insurance company offers a different discount and policy options. Ask a lot of questions and read the fine print. Know the coverage, make sure it’s adequate and pay close attention to the pricing. Don’t get comfortable, assuming you’ll have the bundled discount for the life of the policy. Things change – premiums increase and if you don’t notice it, you’ll lose the initial savings.

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