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Should You Bundle Your Home and Auto Insurance?

home and auto insurance

There’s a good chance you already bundle your home and auto insurance. In other words, you currently take advantage of the discounts many insurers offer when you buy more than one type of coverage from them. J.D. Power and Associates reckons that, in 2016, 73 percent of customers have both their auto and home policies with their current auto insurer, the same proportion as last year.

For many, that’s a good thing. But it would be a mistake to assume it’s a no-brainer. Indeed, some Americans may be being taken for a ride.

The Pros When You Bundle Your Home and Auto Insurance

Clearly, the big pro is cost. But the discounts insurers offer for this bundling vary wildly, with some delivering 20 percent – and more if you add your life coverage. Others are apparently less generous, and a 5 percent discount is common. If you’re a renter rather than a homeowner, you can usually expect even less.

There are other advantages. For example, you’re dealing with only one insurer instead of two or more, so bundling’s usually more convenient. Depending on the company you choose, you may be able to align the administration of the two products, with a single renewal date and maybe single billing.

Bundlers Are More Satisfied

Director of insurance practice at J.D Power Valerie Monet reveals some intelligence gleaned from her company’s 2016 U.S. Auto Insurance Study: “Satisfaction is slightly higher for bundlers vs. non-bundlers. Satisfaction averages an 821 (on a 1,000-point scale) among bundlers vs. an 804 among people that have their home insurance with another insurer.”

However, Monet acknowledges that it’s important to differentiate between cause and effect. It may be that people who are already very satisfied with an insurer tend to bundle, rather than that the bundling itself improves their satisfaction. “Bundling tends to be the outcome of positive experiences with the insurance carrier,” she says, “rather than what drives satisfaction.”

The Cons

Just like those offered by other retailers, discounts when you bundle your auto and home insurance can vary depending on the company. Suppose your bundle turns your $1,000 a year cost into an $800 one. That’s fantastic – unless you could buy the same coverage from two different insurers for $750.

There can be other risks with bundling. Some insurers are specialists, and one that may be great at dealing with auto claims could be terrible at managing ones related to home coverage. And some may be disastrously slow and inefficient when handling all claims. Do you really want to put all your eggs in one of their baskets?

Another potential drawback can arise when bundling discourages you from shopping around. You can end up assuming that whopping discount on each renewal notice guarantees you’re getting an amazing deal. But it doesn’t. And your insurance needs change as you reach different milestones in your life (go to college, start work, get married, have kids, etc.), and that means you need to regularly review the coverage you have.

How to Get the Best Deal

As always with insurance, your goal is to get the coverage you want and need at the lowest price. Often, bundling will deliver that. But sometimes it doesn’t.

The only way you can be certain you’re meeting your goal is to shop around, getting quotes from multiple insurers. Then you have to make sure you’re comparing apples with apples. What are the deductibles? What’s covered and what’s excluded? And, of course, what difference does the discount you might get when you bundle your home and auto insurance make?

You might also want to check your candidate insurers’ reputations for handling claims quickly and efficiently and for overall customer service. Googling the company name alongside the word “complaints” is crude but effective. However, every organization with thousands or millions of customers messes up from time to time, so worry only if there are loads of similar stories. Searching the Better Business Bureau’s website might also help.

To sum up, it’s always a good idea to see whether bundling can help reduce your overall insurance outgoings. But don’t be so dazzled by that big discount that you fail to check if you could do better elsewhere.