Does it make more sense to buy products and services together rather than going it alone?
Most of us know that it’s possible to bundle different insurance policies like renters, home and/or auto. Bundling insurance can save some money, time and provide the feeling that all our insurance needs can be handled by one team—a one-stop shop. The specific advantages and the discounts of bundling can vary greatly by provider, location, and individual situations. Your best bet is to look for home and auto insurance bundles. Those are the most common way to save money but there are still plenty of other options.
To find the best, most comprehensive deal, you have to do some digging. We want to help streamline your research process and make the benefits of bundling more clear and accessible to you.
By the end of this article, you should have a strong sense of whether packaging multiple insurance types will save you dollars overall or have you spending frivolously. You’ll also be able to find the best insurance bundles for you.
Why do insurers—and consumers—like the idea of bundling?
Insurance is a product that makes the consumer feel safe and protected against the random and mostly unpreventable curveballs life throws our way.
Take for instance natural disasters like the Houston floods, or the California wildfires. Or, more common instances like a car accident or house break-in. Clearly, we don’t expect these horrific acts to happen to us, but they are still possible. And, having insurance to protect us, is our saving grace.
Insurance is a necessity, that consumers need to take very seriously.
Nonetheless, insurance policies are products living in a free market world and are subject to supply and demand. So insurance companies, in the interest of business viability, treat insurance bundles the way salons treat “spa day” packages or how cable providers lock in a cheaper monthly rate when you sign on for two years rather than pay month to month. The more locked in you are with your insurance company, the better deal you can get.
Insurance companies are not only in business to make money month after month, quarter after quarter. Just as in any business, renewable product or service increases help with long-term viability and brand loyalty, also known as customer satisfaction.
A recent study by JD Powers and Associates found that customer satisfaction hit an all-time high thanks to bundling.
“Among customers who have homeowners insurance only, just 28% say they ‘definitely will’ renew with their insurer. Among customers who bundle two policies, 46% say they definitely will renew with their insurer, and increases to 66% when four or more policies are bundled,” the JD Powers study said.
It makes sense to offer bundles and discounts.
Consumer advantages of bundling insurance policies
There are plenty of advantages when it comes to bundling insurance policies, know what to look for, and how to compare the advantages to your personal situation.
Who among us doesn’t appreciate a better bottom line? Most insurance providers offer a discount that can range from 10% to 20% per policy. And for a family or a business on a tight budget, that difference can equal cell phone bills or monthly utility costs.
But as a purchaser of insurance, you really have to process which insurances you need and which insurances are nice to have. For instance, take life insurance. Are you single? You may want to pass. Are you married but young and living paycheck to paycheck? You may want to consider term insurance rather than whole life insurance.
Rather than paying for insurance on multiple portals, you can pay one bill for all of your policies. And if you have questions about billings or renewals, you can get them all answered in one spot.
Nevertheless, that convenience comes with a price tag in the form of another—albeit discounted—insurance bill. Are you certain you need that renter’s insurance? And did you price check it against another company’s non-bundled offering? Not all insurance providers are created equal.
Things happen. Whether you take a hit to your driving record or weather strikes in your neighborhood, if you become too costly for your insurance provider, they have the incentive to drop you. However, if you have more than one policy bundled in their company, the odds of losing coverage become slimmer.
The savings you can incur will vary greatly based on your location and personal situation, but as CBS News reports, they can really add up.
For example, in Louisiana, you would save almost $600 a year by bundling auto and home insurance. Meanwhile, in Mississippi, where auto and home insurance costs slightly less, your savings would be $520 per year. But in Vermont, you’d save just $175 annually.
On average, bundled insurance savings would be more than 16% for consumers.
Tips before bundling:
Though in most cases bundling will save you money, don’t just blindly jump into it. Price out what individual providers charge, then compare that to deals you scope out after bundling. Compare all of your options before making a final decision.
Let’s consider the following example: You have Geico home and auto insurance and would like to get their life insurance too. If you are looking for a basic term life insurance for an amount of coverage around $250,000 or less, there’s a good chance you will find another vendor offering that coverage for less than Geico’s offering, discounted or not.
In other words, make sure you are checking, not just assuming.
Get detailed with coverage details
Just because you’re saving money doesn’t mean you’re making a wise, overall decision.
Coverage after bundling should remain as comprehensive as it was before the transition. In other words, don’t just focus on the bottom line of monthly premiums. Consider deductibles—how much you have to pay out of pocket if something happens. Also, consider liability coverage. Auto insurance policies, for instance, don’t just blanket cover the issues that can arise from a car accident. There is coverage for vehicle damage, personal injury to you, vehicle damage to the other driver and personal injury to the other driver.
Do an across-the-board comparison of these coverages to determine how good a deal you’re getting, and that you are financially protected in the event an accident arises.
Consider an umbrella
Whether you are bundling insurances or not, you need to be paying close attention to deductibles and coverage limits.
Some policies may cover you up to a certain point, but you’re on your own afterward. In addition, these same policies may not cover you for certain liabilities. Umbrella insurance—also known as extra liability insurance—is the solution to all that. It makes a lot of sense to have umbrella insurance if you own a lot of assets. Make sure to price out what it would cost to own umbrella insurance versus what it would cost to increase the coverage limits on your bundled plans.
How to compare prices
Here is a great place to start when you want to compare prices between auto insurance providers. We have tools to help you do those across-the-board comparisons by location and per your individual circumstances.
A rule of thumb: If you give your email or phone number out to a provider’s web page, you can expect some telemarketer calls for a while. Multiply that by the number of insurer’s you reach out to, and you’ve just created a new part-time job for yourself – dodging unwanted calls.
Instead, we suggest using our tools, which are designed to get you directly to the provider’s website that’s best for you. We are an independent website that allows you to compare insurance companies and receive free quotes, without any obligation. You will find only relevant, and up to date, information for each of the queries that you do.
And, one thing it will save you: the hassle of having to answer numerous robocalls in the following weeks.
How to have “the talk”
When it comes time to pull the trigger, here’s a handy chart to help you through your purchasing process.
|THE TOPIC||THE QUESTION||THE MATH|
|Pricing||How much money will I save each month if I bundle insurances?||What is the monthly premium price?|
|Coverage||What “liabilities” are being covered?||What are the coverage limits?|
|Out of pocket expenses||What are the deductibles?||If I bundle insurances, will my deductibles be lowered?|
Don’t be afraid to ask questions. The more diligent you are in your research, the more money you can save.