Certain assets warrant an insurance policy, including your home and your car. If you need both types of policies — as well as other insurance products — you may want to consider bundling them to help you save a few bucks on your premiums.
Bundling these policies can give you a discount when you buy home and car insurance policies from the same insurance company. But is it always the cheapest option?
“Bundling” your insurance products simply means buying them from the same insurance company, rather than purchasing your home insurance policy from one provider and your auto insurance policy from another. Instead of using various insurance companies for different insurance needs, bundling allows you to stick with one provider.
Bundling is one of many ways to help keep the costs of your insurance premiums low. Most insurance providers offer to bundle discounts for having several policies with them. And not only does bundling help you save money, but it also makes managing your policies under one roof a lot more streamlined.
Insurance companies are in the business to make money, and like other for-profit companies, they will do what they can to increase business. One way to do that is by offering incentives to take out more than one insurance policy with them in the form of a bundling discount. They may entice you with slightly lower premiums for each insurance product you take out if you purchase them all through the same provider.
Home and auto insurance policies are the more common combinations when it comes to bundling discounts. And if you add a life insurance policy to the mix, the savings can be even greater. Depending on the insurance company you work with, the savings can be significant. Some insurance companies can offer savings as high as 25% when policies are bundled, which can equate to hundreds of dollars in savings every year.
The specific discounts offered will depend on the insurance company, where you live, and the type of policies you’re buying, among other factors.
Before you decide to bundle your home and auto insurance policies under one insurance provider, there are a few things to consider first:
If you already work with an insurance provider or have your sights set on one, find out exactly what they offer. While some companies offer all insurance products under the sun, others may offer just one or two. If you want to take advantage of a bundling discount, you’ll first need to ensure that the insurance provider can give you exactly what you’re looking for.
The bundling discounts offered will vary among insurers. Just like you should compare one particular insurance product among various insurance companies, so should you compare the discounts you may receive by bundling your products.
Before you settle on one insurance company, compare the total price of both an auto and home insurance policy package and see where the lowest price lies. Just make sure that you also consider the coverage you would be getting with each insurance provider, as cheaper premiums could also mean less coverage.
If you are not a perfect policyholder because of a history of claims or a sketchy driving record, you may want to look for an insurance company that works with your needs rather than just randomly looking at insurers who offer bundling discounts. In some cases, a low bundled rate with one insurer may still be more expensive compared to a policy with another insurer that will cater to your flawed background and accommodate you with lower premiums.
When it comes to bundling multiple insurance plans, there are some major benefits everyone should understand and consider before making a final decision.
The biggest perk to bundling your home and auto insurance policies is saving money on your premiums.
Since you’re dealing with only one insurance company for several insurance products, keeping track of your policies will be much easier.
In some cases, you may lower your chances of your insurance provider dropping you if you stick with one insurer. This is especially helpful if you have a history of filing claims or live in an area that is more susceptible to certain types of damage to properties.
Some insurance providers may only require you to pay one deductible if both your car and your home are damaged in an incident, such as a fire or major storm. Without bundling, you would have to pay two deductibles before your policy kicks in. That said, you’ll need to verify with the insurance provider in question whether a single deductible would apply in a situation like this.
While bundling insurance is almost always a good idea, there are a few minor drawbacks to be aware of.
Bundling often comes with discounted prices on individual policies. However, that doesn’t necessarily mean that the bundled price you would pay with one insurance provider would work out to be cheaper than two individual policies with two different insurance companies. You’ll still want to do some comparison shopping before settling on a package from an insurance provider.
In some cases, you might think that you’re bundled with the same insurance company, but you might actually be bundled with an affiliate insurance provider. In this case, you might still be getting a bundle discount, but each policy would be with two different companies, which means you’d lose the convenience of dealing with all your insurance needs in one place.
Bundling your home and auto insurance policies makes the most sense if you’re currently paying high premiums in home insurance. It should come as no surprise that a home insurance policy would typically be more expensive than an auto insurance policy given the much higher value attributed to your house.
As such, bundling would probably help you save more if your home insurance policy is very expensive and your car insurance policy is much cheaper.
On the other hand, bundling might not be the best option if your car insurance policy is currently very expensive because of a long history of filing claims, a poor driving record, or a bad credit score. These factors usually translate into higher auto insurance premiums because of the higher risk that you are perceived to be in the eyes of your insurance company.
In this situation, you could save more overall if you went with the cheapest auto insurance provider rather than a company that offers a discount on a bundled auto and home insurance policy.
Bundling your car and home insurance policies can afford you a discount when you take them out with the same insurer. However, there may be times when buying them separately from insurance providers who offer specialized products may be more affordable. Before you bundle your policies with one insurance company, find out if you will be saving any money and take the time to comparison shop for the best price and coverage based on your situation and budget.
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Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.
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