Homeowners & auto insurance: Should you bundle?

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Homeowners & auto insurance: Should you bundle?

Bundling is touted as a way to save money on insurance, since most carriers give discounts to people who buy more than one policy from them. You can bundle most types of insurance, but one of the more common offers (sometimes called a multi-plan discount) involves bundling your car insurance and homeowners insurance. But homeowners insurance and car insurance are two very different types of plans. So is bundling them a good idea? It depends.

Can bundling home & auto insurance really save you money?

Sometimes bundling homeowners and auto insurance, specifically, can save you as much as 25%. However, savings vary widely, depending on the policies you carry and your location, says Jayson Greene, an insurance agent with Carolina Insurance Professionals. And they might not last: Over time, your insurer may raise your premiums — so much so that you wind up paying more than before you were bundling your plans.

The pros of bundling home & auto insurance

Of course, saving money isn’t the only incentive to bundle your homeowners and car insurance. Doing so is convenient for policyholders, since they don’t need to track multiple policies with different carriers and remember a bunch of renewal due dates.

There’s also the loyalty factor. Insurers want your business, and the more policies you buy from them, the more valuable you become. While that loyalty doesn’t always net you a big discount, it could translate into a lower likelihood of getting dropped by your carrier. Say, for instance, you file multiple claims on one of your policies. Most insurers perceive that as too much of a risk to insure and might discontinue your coverage. But if you have a few bundled policies with them, they may be more likely to keep you as a customer.

Bundling also makes it easy for an insurance agent to identity gaps in coverage, since they’re essentially reviewing a single policy, Greene says.

The cons of bundling home & auto insurance

That’s not to say bundling policies doesn’t have its drawbacks. The big one is a risk of inadequate homeowners insurance or car coverage.

"Bundling may inadvertently force customers into purchasing lesser coverage than they truly need," says Stacey Giulianti, chief legal officer with Florida Peninsula Insurance. "If your bundled package saves you $40, but doesn’t cover you when you have sinkhole damage to your home, that’s a major problem."

Plus, some carriers are just better at certain policies than others.

"Companies that specialize in one type of coverage are typically more attuned to the market and customer needs, and can help you determine precisely what coverages you need," Giulanti says. "‘One size fits all’ never truly fits the consumer."

How to bundle insurance

There is an art to bundling. First, check the strength of the insurance carrier you’re thinking of bundling policies with, says Brent Dickerson, a certified financial planner.

"Are they likely to be able to pay the claims if home and auto claims are filed at the same time?" he says. "If yes, then you may actually save money by bundling versus buying separate policies from separate companies."

That’s because you’ll have one deductible as opposed to two, one typical way to save.

Beyond that, you’ll need to do some homework, because, as we mentioned earlier, depending on your state, policy, driving record and other factors, bundling won’t always put you ahead.

Kelan Kline, a personal finance blogger, took advantage of discounts by bundling his home and auto insurance, but when it came to adding motorcycle insurance into the mix, he found a better deal with another carrier. Comparing multiple quotes from multiple providers — even if it ultimately means sticking with your current insurer — is the most transparent way to see how much money you’ll actually save by bundling and where you can make adjustments to your policy.

"Always shop around," Kline says. "In most cases, it's important to always ask what type of discounts you can apply for. As the customer, you always have the power of calling around and getting competitors’ pricing. Use that knowledge to your advantage when you are negotiating your rate."

PolicyGenius can actually help you compare car insurance quotes across carriers here.

Beyond the bundle

Of course, the same goes for checking on a home/auto policy you’ve already bundled. The money you saved before may be costing you now.

"I've bundled my policies and I've unbundled my policies," Dickerson says. "I recommend an annual check of all insurances to make sure (you) get the best policy for the cost. Insurance isn't a set-it-and-forget-it product because it is a competitive market and company's statistics are changing all the time. Some years you may look good to them, other years you may not, but you should definitely shop it around."

Want to learn more about bundling insurance policies in general? We’ve got a primer here on when and when not to.

Image: courtneyk