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 multiple-plan discount) involves bundling your car insurance and renters insurance. But renters insurance and car insurance are two very different types of plans. So is bundling them a good idea? It depends.
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.
The pros of bundling renters and car insurance
The biggest pro of bundling your insurance is the savings. You can save between 10% and 25% off the premiums you’d pay from buying the renters or car insurance policy separately.
That discount can become even greater when more policies are bundled together; you may be able to bundle your life insurance coverage with your car and renters coverage. 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 and home insurance bundling seems to produce the largest savings: nearly 16% on average.
There are also a couple of other reasons why it makes sense to bundle your insurance.
You want convenience. Bundling makes managing your policies easier, reducing the inconvenience of juggling multiple insurance policies with different companies. By purchasing multiple plans through the same provider, it cuts down on paperwork and you don’t have to remember several premium due dates. You’ll use one login and password for your account and you’ll primarily deal with just one agent.
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. For example, consider a situation in which 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 separate insurers for renters insurance and car insurance, with two separate deductibles (the amount you have to pay out of pocket before your insurance company picks up the rest). Bundle those policies with one carrier, and you may be able to file just one claim with one cheaper deductible without sacrificing coverage. You won’t see this type of benefit unless you file a claim, but it’ll make bundling your policies worthwhile.
The cons of bundling renters and car insurance
Bundling insurance can come with its 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 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 renters insurance, but it could mean canceling a perfectly good renters 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. Make sure the perils you were receiving coverage for before bundling your car and renters insurance are still covered under the multiple-plan coverage.
Your coverage needs should come first. If you’re particularly worried about maintaining your comprehensive and collision coverage under your auto insurance policy, or the sinkhole coverage you got under your renters insurance plan, confirm with your representative that there are no major changes. Bundling may result in one-size-fits-all coverage that leaves you unprotected from certain kinds of perils and risks.
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.
When the rules of the bundle become inconvenient. 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.
How much money can I save by bundling my car and renters insurance?
The amount of money you can save by combining your renters and auto insurance policies depends on the carrier. The insurance company will usually offer discounts per the type of insurance, which could mean 10% off your car insurance policy or 20% off your renters insurance policy. Your results may vary, but this could translate to hundreds of dollars per year.
You’ll probably be offered less of a discount if you’re bundling insurance policies in a more high-risk location. For example, if you try to bundle your renters insurance policy in a more hurricane-prone state like Florida, your discount might be lower than if you were living in a landlocked state if you can get coverage at all.
You’ll also save money by bundling your car and renters insurance when filing a claim. Deductibles can reach into the hundreds or thousands of dollars for some claims, and you’ll have to meet the amount per policy before the insurance company will pay the rest. After you bundle your renters and home insurance policies, you’ll only have to meet one deductible.
How to bundle insurance
Bundling your insurance policies could be as simple as calling up your carrier’s agent or representative, or logging into your carrier’s website and navigating its policy options. Once you have them on the line, ask them to bundle your renters and auto insurance. They should be able to provide you with auto and renters insurance quotes and you’ll get a sense of how much you can save.
After taking a look at the coverage offered by the auto and renters insurance bundle, you may decide to go with another carrier. You don’t need to already be a customer of that insurance company to bundle car and renters insurance with them. 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.
Which insurance can you bundle?
Insurance carriers may differ in the multiple-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.
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.
Examples of bundles offered by major insurance companies like Nationwide, State Farm, Progressive, Liberty Mutual, and Allstate include:
Renters and auto insurance
Auto, renters and life insurance