Many insurance companies don’t provide their customers with just homeowners insurance or just auto insurance, many will bundle home and auto insurance. Bundling your home and auto insurance sounds like a great idea, and it does have its advantages, but it also has its disadvantages.
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The Advantages of Bundling
One of the biggest advantages of bundling home and auto insurance is that it’s easy and convenient to have one insurance company handle all of your insurance needs. This cost-effective bundle can save you more money and provide some additional benefits.
You might have heard that if you bundle your home and auto insurance, you will save money. This is generally true. Combining your homeowners and auto insurance under just one provider can lead to savings and discounts. A multi-policy discount can usually save a customer anywhere between 5% to 30% on their premiums depending on the state and insurance provider. There are also some strategic savings when you bundle home and auto insurance, but you probably won’t notice them until you file a claim for both your home and your car. For example, if a tree falls on your garage and car during a storm, you can just file one claim with your insurance company and pay a single deductible. If you did not have multiple policies with the same company you would have to file two separate claims, one for your homeowners insurance company and one with your auto insurance company, paying two deductibles.
Having one insurance company who can handle both your homeowners and auto insurance policies is convenient. Your insurance agent can review both of your policies in one sitting and in less time if you bundle. Having multiple policies with the same insurance company makes managing your policies from home easier as well, with less paperwork, less online portals, and only one phone number to call to speak with your insurance agent.
Insurance providers often offer unique product tiers with varying levels of complex bundles. Because insurance providers often specialize in different property types and policies, you can almost create your own custom bundle if you want to combine your homeowners, auto, rental property, boat, motorcycle, and RV insurance. These unique bundles limit the hassle of paperwork and provide you with just one monthly bill, sometimes with a single deductible.
Generally, if you have multiple policies through the same insurance provider, that provider is less likely to drop you. This means that if you live in a home that is considered to be high-risk or you have previously made auto insurance claims or received tickets, bundling home and auto insurance can help prevent your insurance provider from dropping you. A high-risk home is one that is located in a region where extreme weather such as earthquakes, tornadoes or hurricanes can occur, the crime rate might be high or any other factor that could increase your homeowners insurance premiums. Loyal customers with multiple policies are always rewarded for fear of losing your various insurance policies to a competing insurance provider.
The Disadvantages of Bundling Homeowners and Auto Insurance
Despite the advantages of bundling your home and auto insurance listed above, there are still disadvantages to using one insurance provider for all of your policies.
The biggest disadvantage of having multiple policies with one insurance company is that it prevents you from continuing to search for insurance policies through other providers. The ease and convenience might make you complacent as a consumer, missing better available insurance rates and coverage options. It might also mean that you don’t actually know what your premiums are or what your coverage provides after a while. Ultimately, you might not even notice if your rates begin to slowly increase or your coverage begins to decrease. Your tunnel vision only benefits your insurance provider in that case, as you make decisions that are not necessarily in your best interest.
As bundling insurance policies become more popular, smaller insurance companies are creating these bundling options that are poorly set up and more expensive. For instance, what you thought was a home and auto bundle through one insurance provider might actually be a much more complex bundle than you thought. You might unknowingly have multiple homeowners insurance policies or multiple auto insurance policies that provide less coverage but still cost you more. This might mean that your home or auto coverage is reduced and you can run the risk of being underinsured.
Similarly, it could also be that the insurance company who was providing you just auto or homeowners insurance and said they would bundle both for you is actually using an affiliated insurance company for your homeowners or auto insurance. In that case, you don’t really have bundle either and you have now lost the ability to choose your own insurance company.
Bundling your home and auto insurance is often a bad idea if you own a high-end vehicle. Owners of high-end or performance cars actually won’t get much from a traditional auto insurance policy, so bundling a traditional auto insurance policy with their homeowners insurance policy is more of a disadvantage. Repair costs for high-end vehicles usually tend to be high, so a traditional auto insurance provider will either charge very high monthly premiums or just refuse to cover the performance car entirely. If you own a high-end vehicle it’s best to use an auto insurance provider that specializes in performance vehicles.
How to Bundle
Typically, the option to bundle your home and auto insurance policies is at the end of your insurance application and the insurance provider will ask if you would like to add an auto or homeowners insurance policy on to your existing insurance policy. Compare bundled home and auto insurance quotes from several different insurance providers and regularly compare quotes to single auto insurance and homeowners insurance policies before deciding to bundle your home and auto insurance policies. If you are already insured by another provider and are switching to bundle your home and auto, ensure that you follow the proper procedures to avoid paying any cancellation fees or lapse in your insurance coverage.