TLTR: This blog explores insurance bundling and the specifics behind it. Learn how you can save money on your insurance policies and gain ample benefits by putting together coverage plans.
If you’re like most people, you lean toward buying insurance based on what your friends and family have purchased. If you’re not any more discerning than that about the process, you can end up with an odd mixture of policies from different insurance companies. Under those circumstances, your monthly premium costs will almost certainly be higher than necessary. Rather than haphazardly throwing various insurance policies together, the smart approach is to bundle.
Bundling is a term used in the industry when an individual purchases two or more policies from the same insurer. For instance, clients are often advised by agents to bundle their homeowners insurance and car insurance or other policies from the same company. It has become popular with insurance companies, as it allows them to sell multiple insurance plans at once. But it also has advantages for the customer, which we’ll explain below.
How Does Insurance Bundling Work?
Insurance bundles are offered by insurance companies that provide more than one type of insurance policy within a certain area or that offer similar coverage overall. For example, home insurance lines and car insurance lines can usually be bought together since they pair well with each other. (If someone owns a home, they likely own a car as well.) Usually, there’s a primary policy, often car insurance, and, when another policy is bundled with it, you get a discount on the primary policy.
However, be careful while choosing your bundling option, as not all are beneficial for everyone. Customers generally don’t have the same leeway to customize their coverage the way they do when buying a single policy.
Overall, insurance bundling has its pros and cons like everything else.
Let’s explore both further.
What Are the Benefits of Insurance Bundling?
Bundling your insurance policy has the following advantages:
Insurance bundles can significantly reduce time-consuming activities such as researching for coverage plans and insurance companies. When you select one insurer for all your insurance needs, you don’t have to do the heavy lifting required on the research. And since bundles are generally priced at a lower rate or come with discounts, you also save time looking for affordable rates for your insurance plans.
You can get discounts when buying multiple types of insurance bundled from the same company. Because they’re sold as packages rather than separate policies, the overall cost is less compared to what you would pay getting multiple policies from various providers.
Insurance companies typically offer insurance bundles when they sell insurance plans from related areas of coverage. For example, home insurance lines and umbrella insurance lines can usually be bought together at a discounted rate because umbrella insurance adds additional coverage to home insurance.
Does Insurance Bundling Have Any Disadvantages?
While bundling does help reduce the overall cost of policies, the coverage they provide might not be customizable as per your specific needs. If you’re not careful, you could end up buying a bundle that doesn’t really fit your budget or lifestyle.
When you choose to bundle your policies, you may not spend much time comparing prices and the coverage that different policies offer. There can be instances in which you’re actually getting a better deal buying an individual policy compared to a similar policy in a bundle. Furthermore, the bundled policy might not have the coverage you specifically need or include coverage you have no use for. So don’t just buy bundled insurance because it seems like a good, money-saving deal. Always make sure that the details of the policies make sense for you.
What Kinds of Insurance Policies are Commonly Bundled?
Generally, insurance companies bundle auto insurance with homeowner’s insurance and sometimes umbrella insurance. However, bundling isn’t just limited to those policies. As reported in Value Penguin, companies such as State Farm, GEICO, and All State bundle additional policies such as life insurance, health insurance, and condo insurance, to name a few. These policies are offered to customers with discount rates of 5% to 18%.
Let’s have a look at the specific bundles carriers offer.
All State offers its insurance bundles with their auto insurance policy. Their discount on auto policy included in bundles ranges from 5% to 15%. The types of policies they bundle with auto insurance are:
|Discount for Auto insurance
|Mobile Home Insurance
Note: You can get more discounts on your primary auto policy for mobile home, renters, and condo insurance if you pair it with umbrella insurance.
State Farm offers their customers some significant discounts in their bundles with their car insurance policy. The discount rates they offer for their bundles range from 5% to 18%. The bundles they offer are:
|Available Discount on Car Insurance
|Homeowners with Umbrella Insurance
Note: State Farm also has an added benefit in which they will add farm insurance to their car insurance policy.
As mentioned above, the carriers offer insureds discounts on their primary auto policy. But some will offer discounts on the secondary homeowner’s insurance or condo insurance included in the bundle. Be sure to ask your carrier what they specifically offer.
Things to Keep in Mind While Bundling Policies
Before you bundle your policies, there are certain points to consider…
Figure Out How Much Coverage You Need
The amount of coverage you need defines your insurance rates. If you have an accurate idea of how much you need to be covered for, your insurance provider can get you a set price on your premium. If you overestimate the amount of coverage you need, you can end up paying higher premiums than necessary. Keep in mind that you always have the option to increase your coverage limit when you need it. So, while bundling multiple polices, make sure you have the coverage amount that you need and can afford.
Know What Polices You Want
After figuring out your coverage needs, you will need to decide which polices you require. Since you will be looking into bundles, make sure these bundles have the right type of insurance policies that address your needs.
Compare Insurance Bundle Costs
Shop around and compare costs with different insurers. You can consider the bundled prices offered by carriers as well as single insurance policies. Then compare them with each other and any other bundles with discounts.
Don’t Hesitate to Shop Elsewhere
Sometimes you want to continue relying on a single insurance provider for your insurance needs. While that is completely fine, you will be missing out on other opportunities that could provide you with cheaper offers. While bunding your policies from one insurer does have its advantages, there can be opportunities to get similar bundles at cheaper overall rates and sufficient coverage.
You don’t have to stick with bundles from just one carrier. Also, if you get individual policies that are cheap and provide you the coverage you need, go for it.
Opting for an insurance bundle can definitely benefit you. You can certainly choose individual policies and find good deals if that’s what you want. But, if you like the simplicity and discounts that come with bundling, then go for it.
Look for insurance bundles offered by different carriers and compare what they offer according to your needs. At the end of the day, an insurance provider needs to meet your coverage needs and your budget.
If you’re ready to look for insurance agents and get a great deal on a bundle, then feel free to contact a local insurance agent today!
Frequently Asked Questions
Should I Consider Insurance Bundling If I Need Multiple Policies in My Family?
Yes. If you have the need for more than one policy within your household, you can get a discount. Bundled insurance discounts are also known as multi-policy discounts. However, not all carriers provide their customers with multi-policy discounts.
Be sure to consult with an insurance agent for more information.
Which Insurance Policies Are Bundled Together?
Usually, insurance companies provide insurance bundles or multi-policy discounts on a car insurance policy if you pair it with a home insurance policy. But that isn’t always the case. Other policies similar to home insurance may qualify, such as condo insurance, renter’s insurance, and mobile home insurance.
Some insurers also provide bundling options for boat insurance and RV insurance when you get a home or auto policy. Make sure to ask an agent or insurance provider about whether you can add these to your bundle.
Is Bundling Worth It?
If you have a limited budget for your insurance and plan to save money, then bundling is a great option to consider. By using the same insurance company for your home and auto polices you can limit your expenses and simplify your insurance plan.
Furthermore, if you make a lot of claims, bundling can be good for you. Usually, insurance companies drop clients with too many claims on their car or home insurance. But if you have bundled multiple insurance policies from the same insurer, they are more likely not to drop you. But keep in mind that that isn’t a good reason to make unwarranted claims!
January 26th, 2023 · 6 mins read
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