The Pros and Cons of Choosing a Home and Auto Insurance Bundle

April 12, 2017

home and auto insurance bundleYour mama always told you to bundle up when it’s cold outside. But did she tell you to bundle your insurance, too?

Bundling — the practice of buying multiple types of insurance from a single company — can result in hefty discounts. Most people opt for a home and auto insurance bundle, but you can also combine life insurance, motorcycle insurance, RV or boat insurance and umbrella insurance. We found three big benefits to choosing to bundle insurance, as well three reasons you may not want to do it.

The pros of a home and auto insurance bundle

  1. You save money. Insurance companies want to be your go-to for all insurance needs, so they’ll usually offer a bundle pricing discount. How much can you save? That may depend on where you live. Look at this map to see how much people in your state save on home and auto insurance bundles, from 7.6 percent in Florida to 22 percent in Georgia.
  2. Your insurer is less likely to drop you. If you bundle insurance, you automatically become more valuable to your insurance company. If you have a bad year and file multiple auto insurance claims, the company might be tempted to drop you — unless you hold multiple policies.
  3. You may save big on your deductible. If a tornado damages your car and your house in one fell swoop, you’ll feel pretty unlucky. But there’s one bit of good news: With a home and auto insurance bundle, you may only have to pay a single deductible for both claims. Note the word may; policies vary, and you may not get this benefit.

The cons of a home and auto insurance bundle

  1. It’s harder to leave. Let’s say a tree falls on your garage, and you file a homeowner’s insurance claim with your insurance company. They give you the runaround and refuse to fully pay for the damage. You’re so furious, you decide to find a new insurer. Trouble is, you bought the home and auto insurance bundle, so now you have to find new insurers for both.
  2. Managing multiple accounts may not actually be simpler. In some cases, the company handling your home insurance may be different than your car insurer, even if you opt for the home and car insurance bundle. For instance, if you bundle insurance through Progressive, an affiliated or partner company will provide your home insurance. And if you opt for life insurance too, that will be underwritten by a different company. So you’ll still need multiple accounts and passwords.
  3. Over time, the benefits of bundle pricing may evaporate. Many insurance companies have a sneaky practice called “price optimization.” This means they nudge up the premiums of customers year after year, little by little. Policyholders don’t notice the small increases, assuming instead that they’re getting rewarded for being loyal customers. And people tend to stick with bundle providers for the long haul: according to one J.D. Power study, 46 percent of bundle insurance customers say they “definitely will” renew with their provider, compared to 28 percent of customers without bundled plans. Stay too long, and you may pay too much.

Fortunately, there’s an easy solution: Every year or so, take a few minutes to compare car insurance quotes on Compare.com. You’ll get free, accurate quotes from multiple companies, so you’ll know if you’re paying too much for your current auto insurance. Find a better insurer, opt for bundle pricing, and you could see big savings.

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You could save up to 32% by using Compare.com!

Based on a survey of 100 California Residents. Average savings determined via a comparison of their selected policy against their self-reported annual premium.