Bundle Insurance To Get More
You might think price is really the only thing that matters when it comes to buying car insurance, homeowners insurance or renter’s insurance. Price is important, but the value of the coverage you get when you buy insurance is what matters most. Meeting the minimum required by state law adds to your misery when you have to call on your insurance agent in an accident. Minimum means bare bones. When you bundle insurance policies, you get more for less money.
By buying car insurance, homeowners insurance, or renter’s insurance from different companies that offered the lowest rate—and lowest coverage—you might find yourself dealing with multiple insurance companies. A smart move would be to choose one single insurance provider and contact them for a bundled rate. Typically, you will see both a lower price and a higher value.
Most American drivers start out using the same insurance company that their parents had, and never really think to switch. Some drivers may have changed insurance companies somewhere along the way to save a few bucks, but for the most part, they’ve made no conscious choices about their insurance provider. Many first-time homeowners get their homeowners insurance in the same way, as it’s probably the company that their real estate agent or title company had recommended. Life insurance purchases usually follow a similar path.
The Benefits When You Bundle Insurance
Many of the big insurance companies price their insurance rates to attract a particular segment of the market. They usually price their insurance to attract homeowners who need to insure not only their cars, but also their homes and their lives (and other things). Many other companies can beat them on price if it’s left to a head-to-head price check on a single line of insurance (such as auto or home), but these big companies want customers who will stay with them for years instead of shopping around for a better deal every six months. To accomplish this, companies give the best deal to clients who will use their company to insure all three main lines of insurance, as people who buy one type of insurance usually have additional items that need insuring and end up paying much more in total annual premiums than the single-line customer who only insure a car or a house.
Companies offer “multiline discounts” (bundle insurance) to attract customers who will need more than one type of insurance. These companies offer a cheaper rate to insure both your house and car than if you insured each one separately at different companies. The same goes if you add a second car or a life insurance policy – the discounts keep adding up.
How Much Do You Actually Save?
When bundle insurance for auto, home and life insurance, it wouldn’t be unusual for many families to spend between $3,000-5,000 – or more – per year. Of course, these rates depend on where you live, the value of your home and car(s), driving habits, personal health and so forth.
What’s the Catch?
For just one line of insurance, most large multiple-line companies aren’t extremely price-competitive. After all, those thousands of people on staff can really add up. By combining your policies under one roof, the companies benefit from economies of scale and can justify more discounts by getting additional total premiums. In other words, they have more of your money to work with and therefore can justify charging you less.
As for life insurance, people who have a life insurance policy are much less likely to switch insurance carriers because of the difficulty (or even impossibility) of changing policies. This difficulty is due to medical issues, age and the possible need for further medical exams, among other factors, and so people usually keep their life insurance policies in place. For this reason, many large insurance companies emphasize to their sales teams that life insurance sales are a critical product.
Companies also want to give discounts in order to retain customers because it is expensive for companies to continually process (also known as underwriting) a revolving door of new customers. Due to the added expense associated with customer turnover, insurance companies prefer to have customers who carry multiple lines of insurance and keep these policies in place for years. Moreover, bringing all of the insurance from a particular household slightly diversifies the company’s risk.
The Bottom Line About Bundle Insurance Policies
Combining all of your policies with one insurance company can save you money compared to having a variety of carriers. It’s also important to remember, that when one company is handling all of your insurance policies, that’s less time that you must spend sorting through and paying each policy. And as they say: time is money.