What does it mean to bundle insurance?
It’s time to bundle and save some bucks.
Remember back when you first passed your driving test? How did you choose who to go with for your auto insurance? So many of us just opt for the one our parents use and then stay with them infinitum. How about your home insurance? Did you just go for the company your real estate agent or title company recommended? The fact is most of us don’t consciously choose which insurer to go with and once we have one, we all too often just stick with them and don’t bother to shop around for better deals. Sadly, this approach to insurance means you’re missing out on potentially big savings.
But you don’t want the hassle of shopping around?
Of course you don’t. You’ve got better things to be getting on with in your life. That’s why so many of us just stick with the same old over-priced policies we already have. So, what is the solution?
Bundle your insurance instead.
Bundling your auto, home, and life insurance with one company can be a very smart thing to do. Not only will you avoid having to renew three different policies with three different companies every year, saving yourself a whole load of paperwork, but you could also save yourself some serious dollars thanks to the hefty discounts on offer. In fact, throw into the mix your boat insurance and any other insurance you need, and could save even more. Insurance companies typically advertise savings of between 10% and 25% for customers who purchase more than one type of policy.
What’s in it for the insurance companies?
The big insurance companies want to keep you as a customer for as long as possible. They want to make sure you don’t shop around and leave, and they don’t want the costly process of processing new customers. Conventional wisdom suggests it is at least six times more expensive to get a new customer than it is to retain an existing one.
It’s been evidenced that customers who have more than one policy with an insurance company are less likely to leave and are much more loyal to the brand. This is a big motivation for insurance companies to offer you a bundle and offer you a good discount to bundle.
It is also more economical for an insurance company to offer you additional polices once they have assessed you for the first one as they have already carried out the process known as underwriting. This is when your qualities, like income, occupation, place of residence, credit history, and driving record are entered into a central database and analyzed. Whether it is for car, life, renters or homeowners’ insurance, underwriting generally looks at the same factors, and the analysis is often the same. So, if an insurer has already put you through the underwriting process for one policy, it stands to reason that it will be cheaper to analyze you for another policy, as opposed to a brand-new person who has yet to be assessed. This cost saving is another reason insurers offer incentives for bundling to their existing and new customers.
If you take out more than one policy with a company, then the cost benefit to them means they’re able to offer you attractive discounts. You could save hundreds of dollars even. An individual policy with a company may not have very competitive premiums but if you take out several with the same company then they can afford to give you a better deal. It’s a win-win situation for everyone – the insurer saves money and so do you.
Are there times when you shouldn’t bundle?
While bundling your homeowner’s insurance with your auto insurance or another policy will usually save you money compared to buying different coverage from different companies, bundling isn’t always the cheapest option. Occasionally bundling isn’t your best solution and it’s worth being aware of this. The discounts you are offered by an insurance company will all depend on where you live, your claim history, and other factors, including your credit history and the type of coverage.
An insurance company that only offers auto insurance might turn out to provide lower rates than you’ll get by bundling auto insurance with a homeowners policy from another insurer. A separate auto policy might also include other benefits that are unavailable with a bundled policy, such as accident or ticket forgiveness.
It’s important to weigh up all your options carefully and look at the policy details of any bundle you’re considering. An independent insurance agent can help you navigate the fine print included in policies and compare different companies.
It is worth remembering though that bundling your insurance policies does normally save you money but be aware that occasionally it’s not always the best solution for everyone.
What should you do next?
Get in touch with a broker or independent insurance agent and ask them to get you some quotes for bundles. You can also speak directly to an insurance company and ask about their bundles. Compare the prices you get and the type of cover they offer. Shop around now and then you can afford to sit back and enjoy the savings you make for years to come with minimal admin to do.
A few last things to consider before you bundle….
When it comes to insurance there are a few other points to always think about to make sure you find the best deals that work for you.
- Get a professional to review your policy. Getting an expert broker or advisor to review your policies usually costs you nothing so it makes complete sense. They’ll let you know if you could be saving money and advise you on bundle options as well. They will also look at the details of your policies and ensure they are going to cover everything you need them to. If you don’t have the right policy, you could be left in a serious financial hole. For example, if your policy only has actual cash value for your possessions and you’re expecting to be paid replacement cost, you’ll be seriously disappointed. Often homeowners assume that damage from hurricane wind and flood water is covered by their home insurance policies. But this assumption could be a costly mistake. Insurance companies in hurricane prone areas might exclude wind damage, and flood damage is generally excluded from a standard home insurance policy. A good hurricane insurance plan might actually be made up of several separate policies to ensure you have got the right cover in place. It always makes sense to take the time to have a thoughtful and detailed conversation with an insurance advisor to make sure your policy does what you need it to do.
- Check the details. Whether you’re using an independent advisor or if you’re doing it all yourself, you should always read the small print carefully and be sure you know what the policy is going to cover. Always take the time to carefully read everything before you commit. The devil is in the detail.
- Cheaper insurance can be harder to leave. We don’t want to name names but if a premium seems too good to be true then it’s worth taking a look at how easy it is to end the policy. Don’t get caught out and trapped with a company that’s not right for you.
Let’s get ready to bundle.
To summarize, it seems in most cases it makes complete sense to bundle. You save lots of dollars and you cut down on paperwork. But remember to make sure you check the detail and shop around. Get it sorted properly now and you’ll be able to get on with enjoying life knowing you’ve got everything covered and a few extra bucks in your pocket to have some fun. So, isn’t it time you got ready to bundle now?