Saving money while buying insurance policies is one of the most preferred things to do. Auto insurance policies, along with other essential insurance policies such as home insurance, renters insurance, etc are all necessary to have. So the more you save, the better deal you get.
One of the most common ways of saving money on multiple insurance policies is by bundling. There are certainly many benefits of bundling insurance policies, especially bundling car and home insurance. But are there any negative aspects of doing this? Does saving money come at a cost?
In this article, we’ll explore the entire practice of bundling car and home insurance and take a look at all the pros and cons associated with it. We’ll also see when you should bundle these two insurance policies and when they must be avoided. But before we get to the pros and cons, let’s look at what insurance bundling is and how to do it.
What is Insurance Bundling?
Almost all the big insurance companies offer multiple types of insurance policies. This means that one company offers auto insurance, home insurance, renters insurance, travel insurance, etc. You can get all the important insurance policies from one company.
“Bundling”, as the name suggests, is when people buy multiple insurance policies from the same company. It is like a package plan that you get to cover multiple things. For example, in the US, bundling home insurance policies and car insurance policies is the most common practice.
There is no specific or complicated process to bundle insurance policies. All you need to do is just buy two or more insurance policies from the same company and ask the insurance agent to bundle the policies to get benefits. Coming to the benefits, what are the pros and cons of bundling policies?
Pros of Bundling Home and Car Insurance
Bundling insurance is a popular practice, which means that there must be some benefit to it. Here are all the pros of bundling car and home insurance policies.
Insurance companies want you to bundle insurance policies. This is because the more policies you bundle, the more policies they sell. This is not a bad thing. If you have chosen the right insurance company that offers brilliant services and policies at affordable prices, then it is great to choose all the insurance policies from the same company.
To reward and incentivize people to buy more policies, insurance companies offer bundling discounts. So if you buy home insurance and car insurance from the same company and bundle them together, you are eligible for a discount. The more policies you bundle, the more discounts you get.
How much can you save? Depends on the company and the policies. But by looking at the average, expect to save anywhere between 5% to 25% in the total price of the insurance policies when you bundle the coverages.
Bundling comes with one more benefit that is often ignored or overlooked; convenience. Think about it. Buying insurance policies from multiple companies means that managing them would be a headache. You need to get different apps, and different methods and the same processes would require to be repeated again and again.
But when you bundle policies together, you can have one dashboard that gives you all the relevant information needed to manage policies. From checking the renewal dates, and changing coverage limits, to paying combined insurance premiums (one payment for all your policies’ premiums), managing insurance policies becomes a breeze.
So if you are someone who has a lot of insurance policies, from liability insurance to homeowners insurance and more, bundling insurance policies would be a great relief for you and save you a lot of time and hassle.
Cons of Bundling Insurance Policies
From what you read about the pros of bundling insurance policies, it seems to be the best thing about managing policies and saving money. So why isn’t everyone doing it? Because insurance bundling comes with its set of cons as well. Let’s take a look.
Not Getting Better Rates
The biggest negative factor of bundling insurance policies is missing out on great deals and buying policies at a higher rate. It sounds counterintuitive, right? Bundling is done to save money by getting discounts. So how can someone lose money by bundling? Let us explain.
Bundling insurance locks you in with one company. This prevents you from comparing different companies, looking at their rates, and selecting the one that suits your needs the best, or is offering policies at the lowest, best rates.
For example, if you live in California, you have to look for the top car insurance companies in California when buying auto insurance policies. The same must be done when buying home insurance policies. But what if the two companies are not the same? In this case, you cannot bundle insurance policies if you want the best rates.
While bundling might get you some discounts, you can save a lot by getting different policies from different companies at a much lower price. When you bundle policies, you cannot compare different insurance companies and what they are offering. You have to choose one company for all your insurance needs. This leads to issues in the long run as well.
Inability to Change
Bundling insurance means that you need to stay on the same ship to get the discounts. If you decide to change your insurance company, you’ll lose all the benefits of bundling insurance policies. But what happens if you do not like the services or prices of one particular insurance coverage, say auto insurance?
What if you find another great insurance company that is offering much better coverage at a better price? Of course, you can switch policies, but that is another hassle to take.
These were some of the cons of bundling insurance policies. So what do you think? Does bundling policies make any sense to you?
Bundling can help you in saving money on insurance policies, but it might not be right for everyone. Here are the pros and cons of bundling car and home insurance.