When you should and shouldn’t bundle your insurance

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When you should and shouldn’t bundle your insurance

In the insurance world, there’s a lot of talk on how bundling your policies can save you money.

Bundling, in insurance terms, is to buy multiple insurance products through the same provider. It could be grouping your auto and homeowners insurance into the same policy, or home and boat, auto with motorcycle or another combination of plans.

It’s often cheaper to buy through one carrier instead of buying individual policies from different companies, the same way it’s often cheaper to buy cable and internet in one package than it is to buy them separately.

Insurance companies have great incentive to promote bundling because they get more business from you. In return, you can get a discount for combining your policies, plus some other perks that make bundling hard to pass up. But it isn’t always the smartest idea, since the savings may come at a cost. Sometimes staying with independent policies proves cheaper than bundling does.

So should you bundle, or let your insurance policies go their separate ways? How you go about it can determine how much money you ultimately save.

Why you should bundle your insurance

Have multiple types of insurance? Combining the right policies may give you the best coverage, the best discount and the most favorable payout. Here’s when bundling your insurance may be the right choice for you:

You want convenience. Bundling makes managing your policies easier, reducing the inconvenience of juggling multiple insurance policies with different companies. When you bundle your insurance plans through the same provider, it cuts down on paperwork, you don’t have to remember several due dates, account logins and passwords, and you’re primarily dealing with just one agent.

You want immediate savings. Bundling becomes an attractive option because some of the savings you incur are immediate. I once combined my car insurance and renter’s insurance under one insurance carrier and saw an instant rate discount on both plans.

Called a multi-plan, or multi-policy, discount, the bigger the bundle, the better a discount you might find -- in some cases, up to 30 or 35 percent off when simply bundling two or more policies. With bundle pricing, you might group two auto insurance policies together for a discount; add more vehicles onto the policy, and you might see a further reduction.

That discount can become even greater when more policies are bundled together, like life, auto, or home insurance. Mixing and matching your existing policies under one umbrella carrier saves money that can be used elsewhere. The more coverage, the more potential savings. Overall, statistics show that car/ home insurance bundling seems to produce the largest savings: nearly 16 percent on average.

You want strategic savings. Sometimes, the money you save by bundling your insurance policies isn’t immediately apparent, but it’ll show itself under specific circumstances. A tornado whips through your neighborhood and tears part of your roof off, and causes a tree to fall and crush your car.

Before bundling, you’d have to file two separate claims from two two separate insurers for homeowners insurance and car insurance, with two separate deductibles. Bundle those policies with one carrier, and you may be able to file just one claim with one cheaper deductible without sacrificing coverage. If you bundled home and auto insurance, and a flood caused damage to your garage and the car parked inside, you may only need to pay on deductible instead of two. You won’t see this type of benefit unless you file a claim, but it’ll make bundling your policies worthwhile.

Bundling two or three vehicle policies, like auto, boat and RV, are best done through a carrier that specializes in those types of insurance. If the bundled policy is tailored to the most important item being insured -- like a house or new car -- then, by all means, take the deal. If not, keep shopping and getting quotes from other carriers.

When you shouldn’t bundle your insurance

Bundling insurance can come with its fair share of drawbacks. If you’re going about it just for the discount, it may be for the wrong reason, so be careful before linking your policies together. Here’s when it might not be the best idea:

When bundling reduces your insurance coverage. Bundling your insurance just for the discount can be like getting a credit card just for the sign-up bonus. It can save you money up front, but it might mean unknowingly signing up for a new policy with lesser coverage that can cost you more out of pocket when it comes time to file a claim. Your auto insurer may encourage you to bundle car and home insurance, but it could mean canceling a perfectly good home insurance policy with good rates for a bundled plan that doesn’t match the quality or protection of your original insurance.

Check your insurance contract to see if your premiums or deductibles have risen, or if your limits have lowered. The purpose of bundling is to consolidate policies and save money, not sacrifice it -- but if you’re stuck with inadequate coverage and you can’t afford your deductible, it defeats the point.

When it stops you from shopping around. Brand loyalty is a good thing if you’re getting a good deal, but if you’re sticking with a bundled policy under one insurer, it could prevent you from looking for better policies -- single and bundled alike -- with better providers. Becoming complacent with your current insurance policy could mean overlooking better rates or better bundling packages/ discounts from other carriers.

Look at the big picture and double check the details of your policy before bundling. It’s easy to take your agent’s word, and that doesn’t mean you shouldn’t trust them -- but you’re the one paying for the policy, so comparison shopping is your biggest asset. Even if you’re saving money from bundling, never stop shopping around. You’re not obligated to buy multiple insurance policies from the same carrier. The insurance you’re bundling with a new provider should be equal or better to the coverage you’re canceling. Sometimes, it’s not always about getting a good deal on your policy but feeling comfortable with your insurance company that counts.

When bundling leads to an outdated policy. Not only might bundling stop you from shopping around, it could mean your new bundled policy of auto, home and life starts to become stale -- and stops meeting your family’s needs. Over time, it could mean an insurer starts to raise premiums bit by bit. And you might not notice if you’ve become too comfortable with your current policy, continuing to believe that you’re being rewarded when you’re actually paying more than you need to -- or worse, continuing with a policy that suited you a year or two ago, not for today.

Go beyond the financials of the policy, too. While your original plan allowed you to use your own repair company or visit your garage of choice, a bundled plan might have its own rules, and that could mean being dissatisfied with service you’re paying for. Regulations in one state may prohibit bundling certain types of insurance (like hurricane insurance in Florida), but allow other types of insurance in others -- home and earthquake insurance can be bundled in other states. Bundling may also allow you to buy umbrella insurance at a discount to provide extra liability coverage.

Which insurance can you bundle?

Insurance carriers may differ in the multi-plan discounts they offer. Regulations prevent discounts on some products—like life insurance—but some insurers will still give you a discount on other coverage if you buy life insurance from them. Here’s what some of the major providers allow you to bundle:

Nationwide

  • Home and auto insurance

  • Auto, home and life insurance

  • Multi-car insurance

  • Boat insurance bundle package

State Farm

Progressive

Liberty Mutual

Allstate

Bundling your insurance policies doesn’t necessarily mean saving on them, so compare what you’re currently paying for coverage versus what you might pay after combining plans. As you configure your costs, remember that health insurance isn’t usually available to bundle with other insurance policies.

At the end of the day, trust your instincts. Does it feel like the right move at this time, discounts notwithstanding? Knowing your limits, exploring your options, and working with the right insurer are key to deciding if bundling insurance is worth the savings.