My business partner and I insure the California home we share, as well as both our cars, using the same provider. We originally did this for convenience and discounts, but lately, a more powerful reason has emerged: We are still able to get home insurance in a region in which providers have dropped many other home policies due to fire risks. That’s because we give the company all our business by bundling our insurance.
Granted, our home insurance premium has increased by over 400 percent since wildfire struck our neighborhood in 2020, but at least we can still get insurance without resorting to the more expensive state-run plan. Given the projected expenses of recent fires in Los Angeles, the upward trajectory of our premium is bound to continue, but at least we are able to satisfy the insurance requirements of our mortgagefor now.
If you’re a homeowner in a low-risk region, you may not run the risk of losing your insurance, but you can still benefit from bundling. Or you might not.
We assembled a group of experts to help you decide whether bundling is right for you.
What Is Bundled Insurance?
If you need insurance for your home, your cars, your pets or other valuables, you can often save money by taking out multiple policies with the same provider. This is called “bundling.”
“Bundling…often comes with a discount,” advises financial expert Timothy Chase. “These discounts can range anywhere from 10% to 25%, depending on the company and the policies.” The discounts are usually on top of others that the company offers, such as the good-driver discount.
Does Bundling Insurance Actually Save You Money?
Bundling insurance doesn’t always save you money. It depends on the company and the type of insurance you need. “On paper,” says Chase, “the discount sounds like an easy win. But what many people overlook is that savings aren’t just about the percentagethey’re about the bigger financial picture.”
For starters, Chase points out that you wouldn’t realize much of a benefit if you bundle with a company that has great auto insurance rates but high home insurance rates. “In this case,” he says, “bundling might wipe out the potential savings. It’s like paying more for one thing just to get a discount on another.”
In other words, bundling locks you into a single company for all your insurance needs, and that can make it harder to customize coverage for your specific situation. “For example, if one company excels in auto insurance but falls short on offering comprehensive home coverage, you’re stuck with a compromise,” and you could end up paying more for coverage.
What Insurance Providers Say About Bundling Insurance
“Bundling does save money,” advises Leslie Kasperowicz of Insurance.com, “but that doesn’t mean it’s the cheapest option. It’s possible, and in fact not uncommon, for two separate companies to offer home and auto insurance rates that add up to less than the bundled rate with a single company.”
Whether or not bundling actually saves you money, it does offer another potential benefit, notes insurance specialist Carlos Gonzalez-Avila. It might open the door for a carrier to offer an umbrella policy that enhances your liability coverage beyond the limits the company typically offers. If you have such an arrangement and you exceed the coverage limits on one policy, the provider can supplement it by drawing from another policy in the bundle. “It’s important to note,” says Gonzalez-Avila, “that carriers typically will not write an umbrella policy over another carrier’s policies.”
Bottom line: All the insurance experts I interviewed advise cost-conscious consumers to shop around for the best rates before deciding to bundle. As Melanie Musson of Clearsurance.com puts it, “The only way to know how things will work out for an individual is to compare quotes for both home and auto insurance and compare the best rates separately to the best rates bundled.”
What the Data Shows About Bundling Insurance
Home insurance premiums have been spiking in recent years in response to natural disasters, and auto insurance premiums are going up, too. According to CBS News, auto insurance rates increased by 12.7 percent from 2023 to 2024. That may be why a 2015 study by J.D Power showed that 80 percent of homeowners bundled their home and auto insurance, and customer satisfaction among bundlers was higher than it was among non-bundlers.
One reason why for discounts, which cons be considerable, is that insurance providers often regard bundled policies as lower risk. That’s probably one reason why our provider still covers our home.
Alternatives To Bundling Insurance To Save Money
Bundling your home and auto insurance isn’t the only way to save money on your insurance premiums. Here are some alternatives:
Shop around
“Get quotes for bundled policies and compare them to individual policies from other providers,” advises Chase. “Take the time to understand what’s included, what’s excluded, and what your total costs will look like over time.”
Get group insurance
Shop around for private exchanges that offer cheaper rates because they insure groups of people in similar situations. Alumni of certain universities, members of homeowners associations and professional association members are all examples of people who could potentially qualify for group rates.
Reduce your coverage, raise your deductible
Get the minimum liability and damage coverage required by your lender. Don’t bother with comprehensive and collision insurance for your car if you don’t need it. You can also opt for a higher deductible, which is the amount you have to pay out-of-pocket on a claim before the company starts to pay.
About the Experts
- Timothy Chase is a financial expert and mortgage broker with over 20 years of professional experience. He is the Owner of 719 Lending Inc. in Colorado Springs, Colorado.
- Leslie Kasperowicz, a managing editor at Insurance.com, has four years of direct agency experience and over a decade of creating educational content to help insurance shoppers make confident, informed decisions.
- Carlos Gonzalez-Avila is the Small Commercial Insurance Specialist at Bold Penguin. In this role, Gonzalez-Avila provides support for commercial insurance agents.
- Melanie Musson, a published insurance and finance expert, specializes in the auto industry, real estate, home security, consumer analyses, investing, and finance. She is affiliated with Clearsurance.com
Sources
- CBS News: Should You Bundle Home and Auto Insurance? (2024).
- J.D. Power: Gen Y Consumers More Likely to Split Their Policies across Multiple Insurers than Any Other Generation; (2015).
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