Bundling Insurance: Should You Purchase Multiple Policies from One Insurer?

Most large insurance carriers provide all major policy types, including health, life, homeowner’s, and auto insurance. When you purchase an auto insurance policy, you will most likely have other coverage needs that the same carrier can meet. For instance, you might take out renter’s insurance as well as car insurance. In doing so, you can reduce your car insurance premiums and make managing your coverage infinitely more convenient. However, all-inclusive insurance packages are not necessarily always your best bet. Read on to understand the pros and cons of bundling insurance policies.

Why Bundle?

One source estimates that approximately 70 percent of policyholders bundle their home and auto insurance. Let’s explore a few reasons why insurance bundling is so popular with consumers:

• Cheaper premiums. Virtually all insurance companies offer a multiple-policy discount, which substantially reduces premiums for customers who buy more than one form of coverage with a single carrier. A typical multiple-policy discount ranges from 10-20 percent.
• Single insurance bill. When you purchase more than one type of policy from your car insurance company, you will receive a single, consolidated bill that makes paying your premiums simple and convenient. You won’t have to worry about paying your premiums on multiple Websites or sending in checks to several companies. You make one, no-hassle payment to one company for all of your coverage.
• Simple renewals. As your coverage expiration date nears, you can renew all of your policies at once when you bundle insurance. Making changes to your policies is also much easier with an all-inclusive insurance package.
• Loyalty rewards. You are much more likely to build a long-term relationship with an insurance carrier if you have more than one policy with the company. With long-term carrier relationships come loyalty discounts, which are reductions in premiums granted after you remain a customer for a certain period of time.

When to Avoid Insurance Bundling

Although the rewards of insurance packages are many, some policyholders may not benefit from bundling their policies. In certain cases, keeping auto insurance coverage separate from life, home, or health insurance may actually be more convenient and/or affordable. For instance, the carrier that provides your car insurance policy may not offer the cheapest renter’s insurance rates, even with their generous multiple-policy discount. In that case, you might want to shop around for renter’s coverage with another carrier.

Likewise, sometimes insurance bundling just doesn’t make sense. For example, it would be illogical to take out a health insurance policy with your auto insurer when you qualify for an inexpensive employer-sponsored health plan through your job. Remember that the multiple-policy discount is not always large enough to justify comprehensive insurance packages for every consumer.