It’s easy to get overwhelmed by insurance ads, and “bundling” (combining different insurance policies into one to save money) is a common theme. Think “Flo from Progressive”, the Geico, Liberty Bibberty. Oh, and Doug. The idea that bundling insurance saves money is generally accurate, however, it’s essential to understand the nuances these ads try to convey.
How Bundling Often Saves Money:
Reduced Risk for Insurers:
Insurance companies view customers who bundle as less likely to switch providers. This increased customer retention translates to more stable revenue for the insurer. From the insurer’s perspective, a customer with multiple policies demonstrates a more established and responsible profile, which they perceive as lower risk.
Operational Efficiency:
Handling multiple policies for one customer is more efficient for insurers than managing individual policies for separate customers. This efficiency can lead to cost savings that are passed on to the consumer.
Important Considerations: While bundling often provides discounts, it’s crucial to compare individual policy rates from different companies. Sometimes, a specialized insurer might offer a significantly lower rate for a specific type of policy, even if you miss out on a bundling discount. Therefore, it is always wise to shop around.
The amount of savings from bundling varies significantly between insurance companies and locations. Some companies offer substantial discounts, while others offer minimal savings. Your personal risk profile impacts insurance rates. If you are a high risk driver, it may be better to find a company that specializes in that area, and a different company for your homeowners insurance.
Bundling insurance is a legitimate practice that often leads to cost savings. However, it is wise to compare rates and policies from multiple insurers to ensure you’re getting the best overall deal.
Don’t try and DIY your homeowners insurance with a 1-800 company. Call a local agent who won’t just slap together a policy to ‘save you money’. Homeowners insurance needs to be tailored like a suit, it needs to fit your specific needs.
WHAT TYPES OF INSURANCE CAN BE BUNDLED?
It’s true that “bundling” insurance often brings to mind home and auto policies. However, the scope of bundling can extend much further.
Common Bundles:
- Home and Auto: This is the most prevalent combination, offering discounts on both policies.
- Renters and Auto: For those who rent, this is a valuable bundling option.
- Condo and Auto: Similar to renters, condo owners can also bundle with auto insurance.
So say you’re an Ohio University Grad Student studying business and you rent a two-bedroom at Carriage Hill Apartments off Richland Ave., and also own a car you bought at Don Wood Toyota here in Athens. Say your combined insurance payments for both auto insurance and renters, is $100.00 per month. with a quick chat with our insurance expert Brent Hartman, he might possibly tailor a bundle for you that saves your $10 a month. May not sound like much, but that’s $120 a year savings. $1,200 over a decade. Can you think of something you would like to do with an extra $1,200.00 in the next decade?
Other Bundling Options:
Many insurers allow you to bundle additional policies, such as:
- Motorcycle insurance
- Boat insurance
- RV insurance
- Umbrella insurance
- Sometimes even life insurance, though discounts are not always applicable to life insurance due to regulations.
Oftentimes the savings realized from bundling may not be earth shatteringly huge, but ever dollar counts. A trillion here, a trillion there, and pretty soon we’re talking about real money! π
Key Considerations:
The specific types of insurance you can bundle vary by insurance company. Bundling typically results in a “multi-policy discount,” which can lead to significant savings. It also allows for easier policy management, because all of your policies are with one company.
In essence, while home and auto are the most common, it’s worth exploring the full range of bundling options with your insurer to maximize potential savings.
Perhaps there’s a reason Flo is so well paid, lets let her try to explain it:
Special thanks for the Featured Image by Erie InsuranceΒ
