It’s common wisdom that bundling your insurance services together with the same insurer will save money. In fact, it is almost always the top piece of advice on insurance advice blogs.
So, is it true? In general, it is not a bad idea – many providers will indeed give a discount if you bundle and you can also save time dealing with multiple bills, multiple representatives, etc. However, it is not always the no-brainer it seems to be. Before you call your insurance company and ask to add car insurance to your home insurance, you should consider the following:
Does Your Current Insurance Company Offer The Best Deal?
Any time you add or remove a policy, you should at least do a quick check to make sure that you are not being penalized rather than rewarded for being a loyal customer.
Does The Policy You Are Adding To Your Bundle Suit Your Needs?
If your insurance company does not offer the exact policy you need, then that discount you get from bundling could end up being overridden by extra money paid for being over-insured. Or, worse, you may realize that the home insurance policy you selected does not actually cover the value of your possessions – right after a fire, for example. In some cases, particularly if you are looking for specialist insurance such as livestock or marine insurance, you may be better off regarding money and/or coverage, going with separate companies.
Are You a Renter?
Renters generally save less by bundling insurance than homeowners. Admittedly, this is mostly because renters’ insurance is cheaper, but it’s worth doing the math. And, of course, you need to make sure your renters insurance meets your landlord’s requirements. (Pro tip: Avoid using companies recommended by your landlord unless you have done research and know they are really offering the best deal).
Do You Have Life Insurance?
Bundling with life insurance can be risky. Life insurance tends to last for a long time but if you, for example, buy a house and discover that their homeowners’ insurance does not suit your needs even if their renters’ insurance did, you may be stuck buying from them anyway or lose your discount. It can be difficult, or even impossible, to change life insurance especially if you are older and have medical issues. For this reason, it might be worth keeping life insurance out of any bundle deals.
Sometimes a Bundle Isn’t a Bundle
Always make sure that the insurance company is actually offering all of the policies themselves, rather than farming any of them out. This is more likely to be an issue if you have specialist requirements. You may still get the discounts, but you may find you have to deal with the other insurance company in the event of a claim – a company you have had little to do with and did not choose.
Bundles Tend To Build “Insurance Inertia”
In other words, you may end up with a stale policy because you let things just run through a major life change such as getting married, having kids, or getting a new job. Even if you have a bundle, you need to keep proper track of when your needs change, and you might need to refresh your policy. And, of course, this can sometimes mean you have to unbundle. Perhaps your current company provides great auto insurance…until you want to add your 17-year-old onto the policy, at which point you discover just how bad their rates are for drivers under 25.
Ending The Relationship With Your Insurance Company
If you end up in a bad relationship with your insurance company and they hold all of your policies it can be more difficult and take longer to get out of that relationship. Switching your insurance company can be tough at the best of times, especially if you have ended up in a legal battle with them. (Note that if your insurance company goes out of business, your state has mechanisms to protect you).
Do You Have Special Insurance Needs?
As already mentioned, specialist insurance needs such as boat insurance, livestock insurance, medical insurance for pets, etc., can reduce the number of carriers you can use. You may find that those “odd” policies are best kept out of bundles, and if a company does offer you a deal including them, consider seriously whether you are getting the best coverage.
The take home is that bundling is not always a no-brainer and that just adding an extra policy with your existing provider may, while cheap, not always be the best option. It is often best, especially if you have complex insurance needs, to actually take the time to sit down with an agent who handles multiple different lines and types of insurance and who can give you the advice on the actual cheapest, and best, option.