Can You Really Save Money by Bundling Insurance Policies?

Joseph Meyer
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First: The Potential Problem with Bundled Policies

To understand if you can save money by bundling insurance policies, it’s first important to understand why it can be dangerous to bundle insurance policies together. When times are tight, we all look for chances to save money, and sometimes it can feel like bundling insurance policies is an easy way to do it.

But bundling insurance policies together can have some significant problems, and when you bundle insurance policies together, you’re essentially combining your personal, auto, and life insurance … three areas that are often very specific and very different.

Let’s take a closer look at each situation and see how bundling insurance policies together can cause problems:

Home insurance

Homeowners insurance protects the property in your house. If you bundle this policy with another type of policy, like auto insurance, you may be increasing your coverage beyond your needs. The property in your home isn’t usually covered under other policies. The problem with this is that “overinsurance” can lead to higher premiums and deductibles. So even though you’re not paying more for the house insurance, you’re paying more for the other policies being bundled together.

When Bundling Products Works

You can save money on your insurance by combining policies, but you have to buy a complete package, and you have to have complete knowledge of what you’re getting into.

The best types of insurances to bundle are those that are linked to each other, such as property insurance and vehicle insurance. For example, if you own a home and a car, or several homes and multiple cars, it makes sense to bundle insurances if you can. In this case, you’re less likely to have one without the other. If one of your homes burns down or if your vehicle is totaled, then you’ll have one less cost to deal with.

A common mistake people make is bundling expensive and cheap insurance policies and underestimating how much the cheapest policy will cost. For example, a little known and often overlooked fact is that if you bundle the expensive homeowner’s policy, fire and theft, with a comprehensive full coverage car policy, you will be required to pay for comprehensive coverage on your vehicle.

Another common mistake is to assume that all companies sell packages. They don’t. If you have a different insurance company for each policy, you may not be able to bundle the policies at all.

When Bundling Products Might Not Work

The concept of bundling is one of the many ways that your insurance company can save you money. By combining multiple lines of coverage under one policy, the insurance company can often offer a better overall price. For instance, your homeowner’s insurance typically has a different deductible for wind damage, fire damage, and glass breakage. So by bundling your house, renter’s insurance, and glass coverage under one homeowner’s policy, you could save money due to the fact that your deductible is lower for all three of these policies. The same concept can be applied to auto insurance, life insurance, and retirement accounts. And all of these policies combined can save you money.

This bundling concept is so attractive that many insurance companies have tried to take advantage of it. The problem is that the critics of bundling have seen this businesses practice take too far. In order for bundling to save you money, you must have the products that are being bundled actually share a deductible. If every line of coverage has its own deductible that is separate from all of the others, then you could find yourself paying more for your premiums by being bundled.

How to Bundle Insurance AND Get the Right Coverage

Without Breaking the Bank?

One popular idea among many insurance customers is to bundle as many insurance policies as they can in order to save money. I know, as I am among them. I’ve been bundling my two car insurance policies, my car and home insurance policies. I also have bundled my renters policy with my home owners policy to save a few bucks.

Depending on your current insurance situation, you might also be considering bundling policies with a life insurance policy. The idea of bundling is attractive because it gives you more coverage, at a cheaper price. But before you sign up for a life insurance policy, you should take into consideration a few considerations.

A life insurance policy is a long-term commitment (usually 20 to 30 years), and includes an investment component. If you are not confident enough to invest money, and if you don’t have the discipline to regularly contribute to a life insurance policy, then a life insurance policy might not be right for you.

Consider Separate Insurance Needs Separately

Most individuals may share a need for both life insurance and disability insurance. A young husband and wife may need all of these. But that doesn’t mean that the two families should buy everything together. Some needs like long-term care may not match with the other needs.

Shop Around for the Best Bundle

If you have multiple insurance policies … homeowners insurance, car insurance, life insurance, and health insurance, for example … then you may want to consider bundling all of them into one policy.

Bundling some or all your policies is a popular way to save money on insurance premiums. And since you already require several insurance policies, the idea that you might be able to reduce your overall insurance costs seems legit.

Make sure to compare policies from multiple companies to find the best bundle policy for you. You may be able to get better rates from a different company for some or all of your insurance policies. However, most people find that bundling insurance policies ends up reducing their overall insurance costs.

You may also want to compare the deductibles for each of the types of insurance policies that you’re bundling. If you’re not convinced that you’re a safe driver, then your car insurance premium might be high. If you’re a responsible driver with a low car insurance premium, make sure that your car insurance rate doesn’t increase due to bundling your insurance policies. Make sure you understand the details of the bundle policy before you sign and finalize everything so that there are no surprises.

Bundled Policies. Braided Policies. Tangled Policies?

Are They Worth It?

A lot of consumers are attracted to the idea of purchasing multiple car or home insurance policies from a single source. This might seem like an affordable option when you are forced to get bundled insurance policies due to changes in your insurance needs.

But before you decide to buy existing bundled policies, you need to consider a few things.

In most cases, you’re paying more than you need to for insurance. When you purchase bundled policies, you are more likely to pay higher premiums for your insurance because your purchase is part of a promotional bundle.

Be sure to review your existing insurance policies to see if any of the policies that you may be considering bundling can be deleted based on your needs.

You may be able to get discounts if you don’t purchase bundled insurance policies. Some insurance companies offer lower rates to customers who purchase individual policies for each of their insurance needs. Before you commit to purchasing bundled insurance policies, be sure to compare premium rates and find out what discounts you may be eligible for.

When Should You Seek Out Bundled Policies?

It’s an idea that is so logical and so smart that it’s hard to believe that more people don’t do it: “Bundle” your policies by packaging multiple insurance policies into one large policy. This approach is referred to as “bundling” and is generally the only way to get significant cost savings from your insurance premiums.

But is it as good an idea as we all think? It’s important to keep in mind that many insurance companies will not work with you on your home or car insurance unless you also buy their life insurance, health insurance, or more often than not, long-term disability policies.

People tend to think that there is very little downside to bundling your policies – after all, they do promise significant savings. Companies promise that they can waive your medical deductible, waive a portion of the life insurance premium, and you can sometimes add additional policies or upgrade existing policies while maintaining your coverage limit.

The Discount, of Course

Many insurance companies now offer policy discounts to customers buying multiple policies with them. It makes sense from the company’s point of view as this strategy is meant to encourage the buying of multiple policies with them.

So, is you getting the discount for buying multiple policies with the same insurance company a good idea?

This type of a discount is nothing but a sales tactic which insurance companies use to get you to switch to their policies. By bundling multiple policies with them, they earn a higher amount of business. This strategy, of course, helps the companies increase your rates. You may end up paying more money in the long run.

While policy discounts may seem like a good deal initially, in the long run, they are not. Buying multiple policies from the same company will seldom save you any money. If you want to save money on your car insurance, consider the following points:

Do not just take the sales agent’s word for it: An insurer will try and sell their product to you by citing different discounts you can avail. But do not take their word for it. Instead, ask them for a quote explaining all the discounts you will be getting. Usually, these policies have a time duration attached to them. The discount rates come with an expiry date. If you decide to renew the policy the next year, it will be at full rate regardless of you having multiple policies with them.

Insuring an At-Risk Asset

Insurance is an excellent way to protect yourself against risky events. For example, your home is a valuable asset, so it makes sense to protect it against fire, flood, and other damage. Although your home is relatively safe, you don’t want to put all your eggs in one basket. So what happens if you have a fire? People tend to exaggerate, especially after a tragedy, so it’s hard to know exactly how severe the damage will be. It’s always better to be prepared for the worst-case scenario.

Survivalists who live off the grid have to assume that the next storm will strike in the middle of winter and that it will cut off their main water supply. The best way for this group to stay healthy and hydrated during this harsh situation is to invest in a solar water heating system. This way, even if the power is out, they can still have something to drink. This kind of planning is also important in the event of other natural disasters. As a homeowner, it’s essential that you choose the right homeowners insurance policy so you can recover from the damage.

For the Sake of Convenience

Should I Bundle?

Bundling home and auto insurance is a popular choice among consumers, but it’s not always the best choice. While bundling policies could save you money, there are some drawbacks for consumers who bundle insurance.

Bundling policies limits your agency. With most bundle offers, you get the same insurance company for life. However, most car insurance rates will fluctuate, sometimes significantly year-by-year. Take time to review the latest quotes and compare the best rates for your coverage needs. Just as bundling insurance under one company limits your options, so can a single car insurance policy.

Keep in mind that bundling does not always mean you pay less. The way the premiums are calculated is different with bundle promises that you will pay less as you accumulate a history with the insurance company. When you bundle insurance policies, you should know exactly what you are getting and how you will be spending your money. Also, check the fine print for penalties and restrictions.

Bundling insurance under one company could make your life simpler if you mostly deal with one insurance company, but it could also limit you must if you are satisfied with the service and company you are currently with (such as your auto insurance company). When comparing the costs, check for bundle deals that allow you to keep your current insurance company.

Other Ways to Save on Insurance Premiums

Some policies can be bundled together. For example, auto insurance is often bundled with homeowners or renters, or with motorcycle or boat insurance. But, like health insurance, your home insurance premiums shouldn’t be bundled. Home insurance policies cover different events, and bundling would make your insurance policies harder to manage.

Getting a higher deductible

Is one of the best ways to save money on auto insurance. And while increasing your deductible might be the key to saving money, most people can’t afford to pay out of pocket for major repairs. That’s why most of us buy policies in a combination – a deductible on one policy, and comprehensive coverage on another.

By combining car and home policies to get a lower overall deductible, you can find some great savings on your insurance.

Buying only what you need

Most of us do not really need to buy extra policies which are not related to our main coverage goals. For example, you may need only home and car coverage to protect your assets and family against risks but don’t really need separate medical, dental, critical illness and trip insurance policies (to name a few).

By shopping around thoroughly you may be surprised to find suitable insurance packages that give you more coverage at lower prices than if you buy each policy separately.

You could also combine certain types of major insurance policies to build your own customized policy. In the U.S., a whole life insurance policy offers a simple and effective way of securing your financial future without the need for additional investment.

A whole life insurance policy is designed to cover both your savings and insurance needs at the same time. Whole life policies are also known as permanent life insurance policies because the coverage lasts your life long. So an individual who has a whole life insurance policy will not need another life policy while the first policy still exists.

A whole life insurance policy can be a good option for you if you wish to protect your family and your hard-earned assets. If you apply with a good insurance company, you could be ensured of excellent coverage over long period of time.

Improving your property

Insurance is about risk management. We value our assets and property because we earn our living by providing services and creating goods – and if we suffer a loss, this can totally derail our lives. So, what can we do to protect our property, earn a reasonable level of income, and enjoy the peace of mind that comes with peace of mind.

A homeowner’s insurance policy covers you for the most common and catastrophic losses. Homeowners insurance covers the cost to rebuild the house if it’s destroyed in a fire, or it’s covered for wind and hail damage. Most home insurance policies also provide for replacement of your personal items such as furniture, clothing, and all the small household items that add up to their total value.

Homeowners insurance policies generally expire after a year, so you’ll want to periodically review and update your policy. If you’re planning improvements or you’ve acquired new property, you may want to change your coverage. If you agree to be the primary tenant of a rental property, there are additional coverage options including rental income coverage, and more. You may spend some time finding the right level of coverage.

Even When Bundled, Your Insurance Should be Customized

As more and more people have turned to bundling, Brian Wesbury, chief economist at First Trust Bank, has argued that it isn’t always appropriate. A lot of people are confused because of the way that they are being pitched, saying that you can save money by bundling insurance policies.

But in reality, some insurers will stick you with high deductibles and premiums on one or more of your policies in order to keep your overall premium lower. For example, most people think of bundling their home and car insurance. In this case, your insurer will charge you more for your homeowners insurance that year. That way, the company can shave a good chunk off of your auto insurance bill.

This is why you should avoid bundling your insurance policies if you’re taking out both a mortgage and a car loan. Instead, you’ll want to purchase individual homeowner’s insurance, car insurance, life, and health insurance. Get a quote from each insurer, and go with the company that gives you the best deal.