When you bundle insurance policies, you’re buying two or more types of insurance products with one company. This type of insurance purchase, also known as a “multi-line policy,” has become more available in recent years. A 2011 J. D. Power and Associates survey found that 77 percent of customers bundle auto policies with additional policies and 58 percent of customers bundle their auto and home insurance policies with their existing insurers.
Ultimately, insurance companies want you to bundle because they make more money, says Amy Bach, Esq., executive director of United Policyholders, a non-profit consumer information organization. Bundling insurance policies also gives insurance companies greater access to your claim history and a better idea of who you are. This information shouldn’t impact the policy quotes, however, which are created using algorithms to assess and price your risk.
Overall, you can save money bundling insurance quotes, but, just as insurance rates vary, so do discounts. For example, when auto and home insurance policies are bundled, the discounts range from 3 percent to 22 percent, says Amy Danise, editorial director of Insure.com. As you review your insurance quotes, here are the pros, cons, and how-tos that will help you get the greatest discount.
The Pros
Discounts. The biggest benefit of bundling for consumers, says Laura Adams, senior insurance analyst with InsuranceQuotes.com, is discounts. This is the company’s way of rewarding your customer loyalty, usually with savings off your auto insurance policy.
Convenience. Bundling multiple insurance products can reduce the hassles associated with using multiple providers. If you have all your insurance coverage with one company, you have one bill and one insurance representative, and this can come in handy when you have questions.
The Cons
Missed discounts. If you don’t research a few different companies and instead always defer to your current insurer, you may not get all the discounts you could. “If you’re not shopping around,” says Adams, “you’ll leave money on the table.”
Stale policies. Getting married, changing your commute, or having kids changes your insurance needs, costs, and discounts. It’s important to regularly update your insurance, even when the policies are bundled, to ensure you have adequate coverage.
How to get the biggest discount:
Get different types of quotes. Request quotes from both “captive company” agents that only sell one company’s insurance and independent agents that sell many different companies’ products. Independent agents typically provide more choices, while captive agents often have a longer record of experience.
Compare the whole package. When you’re comparing bundled insurance policies, compare the features and deductibles in addition to the premiums. “The discount may be double digit,” says Danise, “but always look at the total cost.”
Don’t forget the other aspects of the plan. Even as you’re looking to get the greatest discount, don’t forget the other aspects of a plan that are important to you, such as the flexibility to use your local mechanic when filing an auto insurance claim.
Many insurance companies handle a variety of claims well, though some insurers specialize in anything from home insurance and loss to cars and accident claims. “It’s wise to insure your home with a company that focuses on and does a good job of handling home claims,” says Bach, “and your car with [a company] that has a good record for handling auto claims.”
Go with your gut. Bundling insurance policies can save you money, so be sure to ask what bundling options might be available. But, at the end of the day, go with your gut. “You want someone you feel comfortable with,” says Adams.
Samantha Cleaver is a Chicago-based freelance writer whose work has appeared in Scholastic Instructor, Chicago, and other magazines.