Two of today’s most well-known stars of television commercials are the Geico gecko and Flo from Progressive. You’ll rarely watch a sporting event without seeing one or both of them making their pitch about bundling your insurance with their company.
What do they mean when they talk about bundling your insurance? Does it really save you money, or is it just a marketing ploy? Can you bundle other types of insurance products besides home and auto? Read on to learn everything you need to know about bundling insurance.
What is bundling insurance?
Bundling insurance simply means buying one or more insurance products from the same company. It can potentially save a customer money if they buy more than one product from the same insurer, and it’s profitable for insurance companies.
Not only does bundling generate additional revenue for insurers, but customers with more than one policy are less likely to drop their coverage than those with just a single policy. Insurance companies are experts at crunching numbers, and they know that offering customers a discount that keeps them from shopping around is a money-maker.
Depending on the types of insurance policies you’re bundling and the company you’re bundling with, you might save anywhere from 5% to 25% by getting two or more policies from the same carrier.
For example, bundling a Progressive renter’s insurance policy with their auto policy might generate a 5% discount on your auto policy, but bundling your home and auto insurance with them could save you 15% on your homeowner’s coverage and 10% on your auto coverage.
Some insurance companies give discounts for bundling products other than home and auto insurance. They also offer multi-policy discounts if you buy coverage for your boat, RV, golf cart, or segway through them.
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Pros of bundling insurance
Bundling your insurance can provide other benefits than just a monetary discount, including:
Simplicity
Bundling with one carrier makes life simpler. For example, you only have to download one app to check your coverage, make claims, and pay premiums.
Security
Bundling limits the number of passwords you need and how many different places you have to store your banking information if you pay premiums automatically via bank debit.
Reduces your risk of cancellation
Filing too many claims, or one big one, can result in being dropped by your insurance company. There’s no guarantee, but your carrier may be less likely to cancel your coverage because the chances are pretty good you’ll go to their competition if they do and bundle your coverage there.
Cons of bundling insurance
There are also some cons to bundling your insurance:
Higher current cost
If you choose to bundle your insurance, you may end up paying more for your coverage. You can sometimes spend less by buying your auto and homeowner’s insurance from two separate companies rather than bundling them with the same company.
Higher future cost
You’re also less likely to shop around and compare coverage and rates once you bundle. Even though you may initially save money by bundling, your rates may increase down the road, and you may spend more on your coverage over the years.
Still having more than one insurer
Bundling doesn’t always mean both policies will be with the same insurer. Some companies use one or more affiliates to provide products they don’t specialize in.
For example, Geico’s renter’s insurance is not provided by Geico. Instead, they use multiple carriers to provide this coverage. If their relationship with the affiliate ends, you may need to shop around again or face a steep rate increase.
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When is bundling not really bundling?
Technically, when you buy more than one policy from the same company, you’re bundling. But, that doesn’t mean you’re getting a discount.
While some property and casualty insurers discount when you bundle home and auto insurance with them, they don’t discount when you bundle life insurance and home or auto insurance.
For example, if you buy auto insurance and life insurance through Allstate, you won’t get a bundle discount. The reason is insurance companies can’t discount life insurance products; it’s prohibited by each state’s insurance department.
The same holds true when you buy health and dental insurance from the same company. Cigna can’t lower your health insurance rates because you also purchased dental insurance through them. Their rates for those products are filed with the state and can’t be discounted.
Avoiding rate creep after bundling insurance
Though you may have received a nice discount when you first bundled, rates can increase over time, and you can end up spending more on your insurance than you need to.
To make sure that staying with the same insurer you bundled with initially is still the best deal, shop around and get price quotes from other carriers that offer bundle discounts:
- If your rates are raised 10% or more at renewal.
- At least every other year, if not annually.
- When you have a significant life change, like a move, marriage, or divorce.
- If your credit score has improved or worsened. Insurers can legally adjust your rates based on your credit standing (except in California, Massachusetts, and Hawaii).
- After three years have passed since your last moving violation, speeding ticket, or accident.
[ Related: What is lifestyle creep? ]
Bundling can help pay for other insurance needs
Much to the chagrin of insurance companies and agents, consumers only have so much money in their monthly budget for insurance. Bundling can free up premium dollars to help pay for other essential coverage that you need.
For example, the savings you realize by bundling your homeowner’s and auto insurance can add up to hundreds of dollars per year, which can help pay for long term disability insurance or short term disability insurance.
An independent insurance agent can help you shop for bundled home and auto insurance and individual life, health, and disability insurance. You can also find agents, agencies, and carriers online that can provide you with the policy information and quotes you need to find bundled and non-bundled insurance products to protect your possessions and your income.
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.
