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Is Bundling a Good Idea?

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.