You’ve most likely come across an insurance commercial promising big savings by bundling your home and auto policy.

Is this really a good idea? How much can you save? The short answer to that question: Almost always.

Most insurance providers offer more than one type of insurance. Many of them offer home, auto, boat and many other types, including life insurance. Substantial discounts – and some other benefits – await policyholders who buy more than one type of coverage from these providers. Okay, but what exactly does “bundling mean?”
 
What is Insurance Bundling?

Bundling is the insurance equivalent of jumping in your car and heading to your nearest Costco. It’s bulk shopping! The more products you buy from a single company, the cheaper that company can sell it to you. Additionally, carriers also love customers who stick around for a long time, and the more things you have insured with a single company, the less likely you are to switch.

In exchange for getting more of your business for a longer period of time, companies are willing to offer significant discounts. How much can you save? It depends on the carrier and where you live, but can go as high as 25%, with 5-15% being more typical.
There might also be some other benefits besides discount. For instance, like Safeco’s “single loss deductible.” If you have a Safeco auto and home bundle and both are damaged by a single event, you would pay just a single deductible instead of the two you’d owe if your assets were insured separately.

 

Would it ever make sense not to bundle?

In short, yes. Unfortunately, as many insurance companies want you to believe, there really is not a guarantee you will save money by bundling home and auto insurance, so it might not be the cheapest option. Let’s break it down for you.

Let’s say Insurance Co. offers you a quote of $1,600 / yr. for homeowner’s and $1,300 / yr.  for auto, for a total of $2,900. Their bundling discount is 16% off, so your total cost would be $2436. You save over $450, so it has to be the best deal, right?

Not necessarily.

Insurance companies all price based on risk, but they calculate that risk very differently, so it’s not unusual to see a price difference of hundreds of dollars or more between premiums. For auto insurance, Company A might lean more on credit and ZIP code, while Company B cares more about your age and driving history. There are similar factors that affect your home insurance premium.

That means you might find Company A will insure your vehicle for $800 and/or your home for $1,700, while Company B gives you a quote of $1,300 for auto and/or $1,200 for homeowner’s. In the first example we gave, the total with the discount was $2,436, but if you insured your car with Company A and home with Company B, you would pay $2,000.

 

How can I find the best deal?

More often than not, bundling will be the cheapest option, but not always. To know for sure what your best option is, you just have to shop around for both your home and policies, then compare the cheapest of each to the lowest offer you can find with a bundle discount. It’s not terribly complicated, but it is time-consuming and not the best way to spend a weekend.

Of course if you’d rather not do the legwork, a licensed Pawson agent would be happy to do the comparison shopping for you, and in just a fraction of the time it takes to shop around on your own. Ready to get started? Call 203-481-8898 to speak to an agent now or fill out the form below.

 

 

 

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