How bundling your insurance could save your family money
October 26, 2015
Bundling your insurance policies will simplify your bills and possibly save you money.
Most of us aren't born already owning a car insurance or home insurance policy. Most likely we picked those up along the way—car insurance with our first car, home insurance with our first home. We may use the same auto insurance provider our parents did, but select our home insurance policy based on who provides the best rates in our area. The end result is many of us will have a hodgepodge of policies from multiple carriers.
However, some policyholders are opting to bundle their insurance, dropping their old policies to switch to comprehensive coverage through one carrier. While bundling can save you money and simplify your insurance process, it isn't always right in every situation. Here's a few points to consider:
How bundling could help you
"Many policyholders save as much as $400 a year by bundling their home and auto coverage.”
Will bundling save you money? According to Nasdaq, the answer is almost always yes. The publication reported some policyholders saved 20 percent by combining home and auto coverage and as much as 25 percent by bundling auto, home and life insurance policies. According to Insurance Quotes, many policyholders save as much as $400 a year by bundling their home and auto coverage.
In addition to the cost reduction, bundling can simplify personal accounting. You'll have only one monthly bill to pay and only one insurance company to communicate with. Any out-of-pocket expenses you pay will all be going toward the same deductible whether the damage occurs to your home, your car or your teenager's car, depending on how you've bundled your policies.
How bundling helps you insure
If bundling seems too good to be true, consider this: There are several advantages for insurance companies that sell bundled packages. According to Forbes, existing customers are often six to seven times more valuable than new customers. Why? It's easier to sell additional products to a customer who is already pleased with their experience. Furthermore, that happy customer acts as a brand advocate by sharing news of their good experience with their friends and family, which is especially valuable in the age of social media.
As Insurance Quote noted, it's also harder for insurance companies to attract new customers because not many people shop around on their policies. Insurance customers tend to buy policies as the need arises and stay with the same company for many years.
Bundling also tends to produce happier customers. According to a study from J.D. Power and Associates, customers who bundled their home insurance policies with other coverage showed higher overall satisfaction with their insurance companies.
When not to bundle
"The amount of money you'll save varies greatly depending on where you live.”
When considering bundling policies, Angie's List recommended that you keep your most valuable asset at the front of your mind. For instance, if your biggest investment is your home, but a bundled policy offers less coverage for your homeowners policy, it's probably not worth the risk.
The amount of money you'll save by bundling also varies greatly depending on where you live. According to CNBC, weather and state legislation are two big factors that drive this difference. For example, in areas of the country that face a high risk of floods or tornadoes, insurers have more incentive to diversify the type of coverage. They'll likely offer better bundling discounts to attract more customers and offset their losses.
As with all insurance policy shopping, you want to be sure to compare the rates you're being offered. Look at bundled options and separate policies from your current insurance companies as well as companies you don't currently have policies with. If you do decide to bundle, read your policy carefully and be sure the savings don't come with gaps in coverage for any of your assets.