When you “bundle” insurance, you’re buying two or more policies from the same insurance company and getting a discount. You can bundle policies for your home, renters, auto, life, and other vehicles like motorcycles, a boat or an RV.
Bundling your insurance can offer a few advantages: Discounts, one point of contact for payments, and having one provider with a more holistic view of your insurance needs.
The Bundling Advantage
Rates for an auto insurance policy by itself can vary greatly depending on who’s giving the quote. Similarly, you’ll want to comparison shop if you’re bundling policies, so that you’ll know the final price with all the discounts.
Generally, a bundling discount can be 5% to 25%, and it’s generally one of the best car insurance discounts you can get. The most common bundle is auto insurance plus home insurance.
“The reason insurance companies are willing to give additional discounts is the better overall retention of business,” says John Espenschied, owner Insurance Brokers Group in Missouri. People who have more policies with one insurer are less likely to switch companies, he says.
Reasons Not to Bundle Insurance
Bundling your insurance policies doesn’t guarantee you’ll pay less overall. You may find it’s less expensive to purchase your home and auto policies from different insurance companies.
Espenschied recommends getting quotes from a few insurers to compare the bundling vs. nonbundling rates.
He says lower rates can be found by using two different insurers in certain circumstances.
“This happens about half the time when we are quoting a family,” he says. “An example might be a family with young drivers and the home insurance company may not be competitive with auto insurance for younger drivers in the household.”
In some cases insurers will offer competitive rates for car insurance but not homeowners insurance.
Other cases where bundling might not be cheaper: Collector vehicles and high-value homes.
“For example, an individual who owns an exotic sports car may need to seek out a specialty insurer to make sure their sports car is properly insured,” explains Pete Ducich, head of personal lines product development at Farmers Insurance. “Similarly, if an individual inherits a luxury home, their auto insurance provider may not have the best rates, and the individual may have better options splitting their policies between more than one insurer.”
If you want umbrella insurance, you’ll likely want to bundle anyway. Umbrella insurance provides an extra amount of liability coverage above base policies. An insurer might require that you have both auto and home insurance from them in order to get an umbrella policy, says Espenschied.
Having more than one policy from the same company could also save you from a non-renewal. “In these cases, underwriting issues can play a role. If you have a single vehicle with more than one claim [in the past three years] and no other policies, there’s a pretty high probability your auto policy will not be renewed,” explains Espenschied. Customers with more than one policy might avoid the chopping block.
So when you need an additional insurance policy, start with your current insurance company to see what its bundling discount is, but it’s also a good time to shop around.