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Bundling your policies is one of the best ways to save money
on your insurance premiums. Bundling basically means that when a customer
purchases more than one policy, the insurer will apply a bundling discount
which drops the total of all the premiums. When it comes to bundling, most
people bundle their home and auto policies, but it is possible to bundle almost
any insurance product.
Bundling has become much more common in the marketplace in
the last few years. The J.D. Powers 2011 U.S National Auto Insurance Study
found that 58 percent of insurance customers bundle their auto and home
insurance and when all policy types are surveyed the number shoots up to 77
percent.
In some ways bundling has become so commonplace that consumers
are no longer impressed. The J.D. Powers survey discovered that customers are
much more excited by accident forgiveness and vanishing deductibles than
bundling. Despite its fall from grace, bundling is still the most common
discount offered. Here are a few things to remember when bundling your
policies.
Why Bundling is a
Good Idea
Saving money is the biggest benefit of bundling your
policies. While the discounts will vary depending on the insurer, it is not
uncommon to shave 30%-35% if you bundle your auto and home policies. If you
have a motorcycle to throw in the savings will climb even higher.
The premium is not the only place you can save when
bundling. Some insurers allow you to pay only the highest deductible if a
number of your insured assets are damaged. This can offer big savings when
something like a tornado or flood damages or destroys your home and car.
Convenience is another big factor. Bundling reduces
paperwork and means you don’t have to manage a number of different policies.
When renewal time comes around there is only one insurer and one policy to deal
with which can be a real time saver. When it comes time to make a claim you are
only making one phone call which is a huge convenience.
Bundling Might Not be
the Best Deal
While the discounts can be great, it is often possible to
get a better price keeping your policies separate. J.D Powers found that price
satisfaction was actually higher with unbundled customers. This was the first
time that non-bundlers were happier.
The main reason for this is that companies that sell only
auto insurance have aggressively lowered prices making their auto insurance
competitive or better priced than some of the major insurers who tend to
bundle. Another negative is that many insurers are better at insuring cars than
homes. According to industry experts, there tends to be more profit in auto
insurance which increases the competition, driving down prices. In many cases,
if you shop your auto insurance you can find a better deal.
One other downside of bundling is that some insurers are
better at insuring your car than they are at protecting your home. You may find
yourself with inferior protection on your home when you bundle. This can leave
you exposed on your largest assets. Many experts recommend choosing your home
insurer first and then shopping your auto insurance around.
Choose Carefully
Everyone’s situation is different and only you can determine
if bundling makes sense for your particular situation. Shopping around and
exploring your options is the best way to decide if bundling is the right move
for you. Compare both bundled rates as well as stand alone policies. When you
are exploring your options be sure that you are comparing apples to apples and
that the policies offer the same coverage and deductibles. Finally, remember that shopping on price
alone is not always the best option, look for quality as your car and house are
often your largest assets.
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