Pros and Cons of Bundling Insurance Policies

For those in need of multiple insurance policies - home, auto, boat, motorcycle, etc. - bundling several policies together may be an appropriate and cost-saving choice. But depending on your unique insurance needs, bundling may not always be the right answer. Below we’re taking a look at the basics of bundling and whether or not this option makes sense for you.

How Bundling Insurance Policies Works

Bundling insurance policies refers to the practice of buying several policies together in one package through a single insurance provider, typically at a reduced cost. This can be a money-saving move that also streamlines your payments because you’re working through one insurance provider.

However, for those willing to shop around, you may find lower rates for individual insurance policies available through different providers.

It’s not wise to assume that bundling insurance policies through a single provider will always prove cheaper simply because you’re obtaining consolidated coverage from one company. Additionally, it’s important to remember that bundling coverage has the potential to reduce coverage levels or change coverage terms. Read over the fine print and do some shopping before selecting a provider.

Pros of Bundling

The primary advantage of bundling insurance policies is cost savings, but it can also provide the convenience of a single (and sometimes reduced) deductible and less paperwork. Here are a few additional benefits that come with bundling.

#1: Working With a Single Insurance Company

Bundling your insurance policies with a single company is a time-saver. Rather than receiving emails, phone calls or letters from multiple companies for various policies, your insurance needs are streamlined and consolidated. 

#2: Easy Insurance Evaluations

Bundling your insurance with one provider can make it easier for you and your agent to evaluate your coverage needs year-to-year. Doing so can help prevent costly gaps in coverage. Additionally, should you become eligible for discounts, your agent can help you apply them easily across your bundled policies.

#3: Combined Deductibles

In some cases, insurance providers will combine the deductible for both auto insurance and home insurance, providing a smaller total than would be possible with two separate policies. In the event that you must file an auto claim and a home claim in the same year, having a combined deductible could help you save big.

Ask your insurance agent about this potential discount, as it’s not always offered.

Cons of Bundling

There’s always a potential that bundling several insurance policies through a single company will end up costing more money than obtaining those policies through several different providers. Shop around and you just might find several providers with similar coverage and comparably low prices. Even if the initial price point of the bundled insurance is fairly low, there is a good chance the insurer will gradually raise rates across posterity, assuming you will not take the initiative to obtain quotes from other insurance providers simply because bundling is so convenient.

Here we’re discussing a few reasons why you may want to think twice before bundling.

#1: Beware of Fake Bundling

Fake bundling is quite real. This occurs when the insurance policies are not bundled through the same provider. Rather, the insurance policies are bundled through an affiliate business. Though fake bundling might result in a price discount, it forces you to interact with several insurance providers over the phone, by mail and through apps, making the entire process less streamlined than you may have initially thought.

#2: Bundling Auto Insurance May Not Save Money

Those who have a sports car or other high-value automobile may find that bundling auto insurance with other forms of insurance is not prudent.

In cases like this, it can pay to shop around before insuring an exotic vehicle. Auto insurance companies that specialize in insuring sports cars and other high-value vehicles will provide a more competitive rate than traditional auto insurance companies. In fact, some regular insurance providers might not even offer coverage for such a vehicle. In this situation, it makes sense to have separate insurance policies rather than bundling them through a single insurer.

#3: Risk of Making Multiple Claims

There can be a risk in bundling insurance policies through a single provider, as such insurance providers are more inclined to drop or increase rates for those who make multiple claims. If your policies are consolidated and you make multiple claims, there is a chance your insurance provider will view you as a risk unworthy of insuring or hike your rate. However, if you were to keep your policies separate, the insurance providers would not communicate with one another in regard to your potential risk, meaning you’re less at risk of losing coverage.

In general, you won’t want to always assume that bundling insurance policies will save you a considerable amount of money. Do your homework, obtain quotes for both bundled insurance policies and non-bundled policies across various providers and review the details of each before moving forward.