One of the most straightforward ways to save money on insurance is by bundling policies. If you own or rent a home, and have a car, you may be able to shave a considerable amount off your collective monthly premium by consolidating policies and buying insurance from just one carrier. Of course, you may also find discounts through bundling other types of insurance -- including policies that cover boats, personal property or other major assets. But the traditional home and auto bundle is among the most common, and will typically save you the most money in discounted premiums.
We cover the basics of bundling here and provide some insight into the benefits and pitfalls of bundling home and auto insurance.
What does it mean to bundle insurance?
The benefits of bundling insurance
Discounts vary by carrier and, as with many financial products, depend largely on eligibility requirements and your specific situation. That noted, if you qualify, you can reasonably expect a discount of between 5% and 25% when you bundle home and auto insurance.
But lower premiums aren't necessarily the only benefit. Some carriers also offer "single loss deductible clauses" in their bundled insurance policies, which means that you'll only pay one deductible for damage to your car and home arising from a single event. (A deductible is the amount of money you are responsible for paying toward an insured loss before your plan starts paying out.) For example, if an accidental fire in your garage caused damage to both your garage and your parked car, there would be one collective deductible instead of two separate ones.
On a practical level, it's simpler to deal with one company for all of your insurance needs. Many insurers offer consolidated statements and billing, you can access all of your insurance information on the same online portal, your private and confidential information will be less dispersed and you'll go to the same carrier to file claims for your home, car and other assets.
When it doesn't make sense to bundle insurance
Depending on insurance rates in your area, your credit score and your individual track record – including accidents and moving violations or prior claims – it may be cheaper to buy separate insurance policies. In fact, you may not be eligible to bundle plans if you're in a high-risk pool.
"If you have a high-risk driver with a lot of accidents, you might have to purchase auto insurance from a high-risk pool. That likely won't qualify for bundling plans," said Scott Holeman, director of media relations at the Insurance Information Institute.
You may also be restricted from bundling depending on the type of coverage you need. For example, property windstorm insurance – insurance that protects against wind damage, most prominently found in coastal areas – usually isn't eligible to be part of a bundle, according to Holeman.
The bottom line on bundling
For most people, bundling home and auto insurance will offer savings and simplification. But not always. As such, it's worth your while to shop around for quotes and compare the price of policies when purchased separately versus bundled together.