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Pros and Cons of Bundling Your Home and Auto Insurance

Many people are of the mindset that bundling their home and car insurance is a savvy move, believing that it’s simply cheaper and less of a hassle to have everything together.

While this may be true in certain circumstances, it’s not always the case. As a result, it’s important to understand the advantages and disadvantages before going ahead and agreeing to a bundled policy.

PROS

Potential discount

Often times, insurance companies will offer a bundling discount if you choose to group your insurance together (typically home and auto).

This discount can run anywhere between 5-25 percent. However, you should be aware that just because you receive a discount in the first year, it doesn’t necessarily mean you’ll continue to receive it in future years.

Convenience (maybe)

Having multiple insurance policies under the same company can typically save you a bit of time, as you only need one password and log-in versus two, making it easier to track your expenses overall.

However, it’s important to ensure you’re actually with one single company and not an affiliated company prior to bundling. Many times, insurance companies will offer a bundle discount, but force you use their affiliated company for one of the insurance policies. Of course, this completely negates the convenience of bundling.

You’re less likely to get dropped

If you file multiple claims in a single calendar year, you’re more likely to get dropped by an insurance company if you have a single insurance policy with them as opposed to multiple policies.  While this obviously isn’t something you want to rely on, it can become beneficial if you have a particularly unfortunate year.


CONS

Lack of research

People tend to jump at the first discount they see.  It’s very common for home and car owners to receive a discount from one insurance company, figure they’ve already been handed a sizable discount, and stop their research there.

As a result, they often end up passing up on even better deals. To avoid this issue, you should complete your due diligence on each prospective company before inquiring about bundling policies together. This way, you’re less likely to jump at the first offer you receive.

Premium spike

Insurance companies are aware that the majority of people who bundle their insurance stick with one company for an extended period of time and sometimes their entire life. As a result, some take advantage by slowly increasing your premium without you even realizing.

Suddenly, the “discount rate” you thought you had from bundling your insurance together isn’t a discount anymore.  While you may think you’re being rewarded for being a “loyal customer,” the opposite may very well be true in reality.

To avoid this issue, you should review your policy on an annual basis to ensure you’re not getting dinged for your loyalty.

 

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