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If you're on the hunt for auto and homeowners insurance, purchasing your plans from the same company can be an easy and convenient way to save money on your premiums. Here's how "bundling" insurance policies works, plus how to decide if it's the right move for you.
How Bundling Auto and Home Insurance Can Save You Money
Like any industry, insurance agencies want to capture as much of your business as they can, for as long as they can. With that in mind, many offer discounts when you sign up for multiple policies.
The most common—and money-saving—combination is auto and homeowners insurance. According to a study from InsuranceQuotes, the average consumer saves 16.1% on their premiums when bundling these two products. Many companies also allow you to bundle life insurance, renters insurance, condo insurance, or insurance for motorcycles and boats.
Allstate, for example, says you can save up to 25% when you bundle home and auto insurance—and even more when you add life insurance too. Progressive, which offers a discount when you sign up for any two policies, claims its new customers save an average of $1,000 per year when they purchase a home and auto insurance bundle.
Your specific discounts, of course, will depend greatly on where you live and what you own. The InsuranceQuotes study revealed vast differences by state: Whereas consumers in Florida only saved an average of 6.7% when bundling home and auto, those in Mississippi saved an impressive 23.2%. To be sure you're getting the best rates available, shop around before making your final selection.
The Pros and Cons of Bundling Your Insurance
As with most financial decisions, bundling your insurance has its pros and cons. Here are some you should know about:
Pros of Bundling Your Insurance
- Save money on premiums. The biggest benefit, as noted above, is the fact you could save up to around 25% when you purchase multiple policies from a single company.
- Streamline your bills. With just one insurer for multiple policies, it'll be easier to keep track of your accounts (and you'll have one fewer password to remember!).
- Pay a single deductible. If an incident, like a major storm, damages both your home and vehicle, some insurers will only make you meet one deductible before it pays out. If your insurance weren't bundled, you'd need to pay two deductibles to two different companies.
- Reduce your chances of getting dropped. Some experts claim that having multiple policies with a single insurer makes it less likely that the company will cancel your coverage (which could happen if you, say, live in a wildfire zone or make a series of car repair claims).
Cons of Bundling Your Insurance
- It's easy to get lazy. While bundling will often save you money, it's no guarantee. And, even if you could find lower rates by purchasing individual policies, the convenience of bundling may make you less likely to shop around and switch insurers. If your premiums rise over the years, this could be a costly mistake.
- You could end up with multiple insurers anyway. Some insurers act as affiliates, farming certain types of policies out to other agencies—and causing you to miss out on the ease of dealing with one company and one account. If this is important to you, ask your insurer about its approach before bundling your policy.
What to Know Before Bundling Your Insurance Policies
Bundling can be a great way to save money on your insurance, especially if you need coverage for both your home and car.
There are certain situations, however, when bundling may not be the best idea. If your car insurance is expensive—perhaps because you have poor credit, a history of infractions or accidents, or a luxury vehicle—you might save more money by finding an insurer that caters to your needs.
So, before pulling the trigger, compare the total price of the two cheapest individual policies to the price of the cheapest bundled one. And, when doing so, make sure you're comparing policies that provide similar levels of coverage. While a certain bundle may seem like a great deal, its coverage may not be as robust as another policy. It's always worthwhile to read the fine print and shop around.
Ready to Bundle Your Home and Auto Insurance?
For many people, bundling insurance policies can be an easy way to save money on a pair (or more) of unavoidable bills.
If you'd like to see how much money you could save by bundling your home and auto insurance, compare rates with a variety of insurers—and, once you've chosen, check your rates once a year to ensure you're still getting the best price.