If you are in the market to buy more than one insurance plan, you might want to purchase all plans from one company. Buying two or more insurance forms from a single company in a single package is actually called bundling insurance.
It can be beneficial in many ways. For instance, you do not have to visit different insurance providers to get separate insurance plans. Another obvious benefit is companies offering bundled insurance give significant discounts to attract customers. So, you can save time and money, both.
However, it has some disadvantages as well. Now the main question is, should you still buy it? Do the pros of bundling insurance outweigh its cons? In this article, we have thoroughly explained the answer to ‘is bundling insurance a good idea’ by stating its pros, cons, and much more. So, keep reading to make a knowledgeable decision.
Bundling insurance – A general overview
Bundling insurance simply means buying different insurances like home, auto, health, travel, etc., from one insurance provider. It simplifies the process for the buyer as well as for the insurer.
The buyer does not have to visit different insurance companies and check their packages to buy what he likes. He can simply go to one place and combine different insurance policies to create a single plan. It streamlines the process for the companies as they collect data from a buyer for different insurance policies only once, which consolidates the billing process.
Insurance providers usually choose two different methods for bundling your insurance policies. Most of the insurance providers bundle different insurance policies that they provide themselves. Others work with different insurance providers (called affiliate companies). They bundle insurance policies that they provide with the policies that affiliate companies provide to create a single bundled insurance plan for you.
Common types of insurance bundles
Many different insurance plans can be bundled together to create a bundled insurance. You can choose several insurance policies as per your requirements. The provider will then combine those policies to form a bundled insurance.
The most common types of insurance bundles are described below.
Home and auto insurance bundle
As the name indicates, home and auto insurance are bundled together in this form of bundling insurance. The auto could be of any form like a car, motorcycle, boat, etc. This is the most popular insurance bundle. On average, you can save around 16% through it.
According to the U.S. National Auto Insurance Study, more than three-quarters of the insurance buyers bundle two or more insurance policies, mainly their home and auto insurance. Different companies provide the best home and auto insurance bundles. You should do your homework properly before choosing any one of the best home and auto insurance bundles.
Home, auto, and life insurance bundle
In this form of bundling insurance, you combine three different insurance policies (auto insurance, home insurance, and life insurance). The more policies you combine, the more you save on your bundled package.
The cost of such bundles varies from one company to the other. It depends on the kind of auto your own, size and condition of your home, health condition, and several other factors.
If you are self-employed, then you can combine the best self-employed health insurance in this bundle. Similarly, if you are a pregnant woman, you can add the best pregnancy insurance plan to this bundle. You will have many options to create a suitable bundle plan.
Renter, auto, and jewellery insurance bundle
Like the above insurance bundle, this bundle also has three insurance policies combined. However, this bundled insurance is comparatively inexpensive. It is because renter insurance is relatively affordable. You may just have to pay $10 to $15 to get coverage for even expensive property.
You can combine your renter policy with the best jewellery insurance and auto insurance policies. Bundling them will help you save several dollars.
Multi-car insurance bundle
If you own two or more than two cars, then you can buy a multi-car insurance bundle for all these cars. It will allow you to save a lot.
Advantages of bundling insurance
Bundling insurance has multiple advantages. Some of its most prominent benefits are described below.
Saves money through multi-policy discounts
One of the worth mentioning benefits of bundling insurance is it allows you to save a lot through multi-policy discounts. You may get different discounts from insurance providers like good student discounts, first-time homebuyer discounts, etc. But most of these discounts are of no match to the discount you get by combining different policies together.
For instance, if you combine home and auto insurance policies and buy any one of the best home and auto insurance bundles, you may save up to 16% or even more. The saving you enjoy highly depends on where you live. For instance, if you are from Midwest, then you can save up to 20%. If you are from Florida or New York, then you can save up to 10%.
The more policies you combine, the more discount you may get. It is because it creates ease for the insurance provider as well. So, they try to attract customers to buy bundling insurance by paying discounted multiple premiums every month.
Makes the process easier
Purchasing insurance may seem tiring to some people as it involves providing different documents etc. But the same process becomes easier if you allow one policy provider or company to handle all of your insurance plans. The billing process also gets simplified.
Other than that, the process of making claims also becomes very easy. If an unfortunate event happens, you will not have to call different numbers to restore the lost goods. You can call one number and file your claim for all the different insurance policies you bought in a bundled form. If that company has their app, you might be able to file your claim through it and even track its status over time.
Saves a lot of time
Buying and managing different insurance plans becomes easier if you combine them to create a bundled insurance. You do not have to visit different insurance companies for each insurance plan. You can simply contact one company that you believe provides the best home and auto insurance bundles and other forms of bundles to purchase a bundled plan that you find suitable.
Similarly, you will not have to remember different renewal dates and pay your premiums to various providers. You can save your time by allowing only one insurance provider to handle all of your insurance policies under a single bundled plan.
Many insurance companies have their apps as well. You can track your premiums, renewal date, and a lot more through the app without worrying about remembering the dates, etc., of different insurance providers.
Reduces the chances of dropped coverage
Insurance companies can drop a customer who starts causing continuous troubles for them. But if you have bought two or more policies from the same company, the chances of dropped coverage decline.
A buyer who has bundled health, home, and auto insurance together may get overlooked by the insurance company if he is causing trouble only for the auto division and paying health and home premiums monthly. Remember that bundling coverage will not remove all your problems, but it may reduce them notably.
One person handles your insurance policies expertly
When you bundle, one person gets to know you and your needs better. They know your situation well and will recommend suitable insurance plans accordingly.
Insurance may seem like an unsympathetic industry, but if you get to work with a friendly agent, your insurance-related problems might become pretty easy for you. If only one person is handling your different coverage plans, you will be more valuable to him than the clients who buy one coverage plan from him.
He will have enough knowledge of your situation to handle different policies together and offer you suitable policies. For instance, if you own expensive jewellery, he might recommend you bundle the best jewellery insurance with the main policy you are interested in buying. Similarly, if you are self-employed or are pregnant, he might tell you to add the best self-employed health insurance and best pregnancy insurance plan to your bundle to fill the coverage gap you have.
Deductibles combine with bundling insurance
Some insurance providers combine the deductibles and make a smaller total as compared to the two separate amounts. Combined deductibles can save you a lot of money in a year. However, not all insurance companies offer a deductible reduction on buying a bundled insurance. That is why you will have to ask your agent to learn whether you will get this benefit or not.
Disadvantages of bundling insurance
Although bundling insurance is beneficial in many ways, there are still some disadvantages linked to it. The common cons of bundling insurance are described below.
Coverage may not be sufficient
The most attractive feature of bundling insurance is you get good discounts. That is why many people buy bundled packages. But have you checked the coverage a discounted plan and an undiscounted plan offers? They can be a huge difference between them.
For instance, if you have bought a good-quality home coverage and now want to add auto insurance to it. Then the auto insurance policy may not be as good as your home insurance policy is. If the company is saying you will get discounts on monthly premiums, then the coverage maybe not be as good as the coverage of separate policies is. Therefore, make sure you compare bundled policies with the policies that are bought separately.
Benefits may disappear with time
Insurance companies attract buyers by offering discounted premiums. They will tell you that you can save thousands of dollars by bundling different policies. That is true to some extent. Sometimes, companies start increasing the cost of premiums after a few years and even after six months.
Some companies increase premium prices simultaneously, and some do it gradually. You may enjoy discounted premiums for some time and save a certain amount. But once the premiums get expensive, all the savings made initially will start dissipating. Companies know that buyers have bought bundled insurance and may not have enough time to go and look for new insurance providers. So, they increase premium prices without thinking much about the burden that buyers may feel.
Bundled with an affiliate company
As described earlier, some companies outsource insurance plans that they do not offer to an affiliate company. It can either be good or a disaster for the buyer. Because you never know whether the other company is as reliable as the company from whom you have been purchasing insurance for years is.
Although your insurance plan will fall under the name of your main provider, the details of the other policy will get sorted out by the other company. If you want to make a claim, you will again have to contact the affiliate company instead of contacting the person who you believe has been handling the whole coverage. That is why letting only one trustworthy provider manage the whole coverage is important to avoid trouble in the future.
Should you buy bundling insurance
Bundling insurance is a more convenient and feasible option for people interested in buying different insurance plans. It allows you to save hundreds of dollars as well as time. We know time is money, so you are actually saving money by saving your time. Therefore, purchasing bundling insurance is considered a good idea.
However, you need to be more conscious and careful while buying bundled plans. Many companies will say they have the best home and auto insurance bundles. But do not rely on their words completely.
Do your homework properly and compare bundled plans with the separate plans to know the difference. Know what you are getting. Ask questions to find how much you will be covered. If you do not want to buy a bundled plan linked to an affiliate company, let the primary company know that.