While bundling is quite a funny sounding word, it can end up saving you a significant amount of cash on your auto insurance. Companies are often advertising the discounts policyholders will receive when they bundle their car and motorcycle insurance policies under a single name.
According to those who have tried this concept, it is often cheaper to purchase through a single insurance provider rather than by the individual policies from various companies, just as it is always cheaper to purchase internet and cable in a single package instead of purchasing them separately.
Insurance companies are creating more incentives to promote bundling since there is a lot of business that they get from you. And in return, you will receive a discount for bundling your policies, in addition to a few other perks which make bundling quite irresistible. More often than not, however, this is not always the best idea since these savings might come at a cost.
How Bundling Works for the Insurer and Policyholder
Insurance companies are now preferring to offer their customers more than a single insurance policy. This is because research shows that it can be at least six times more difficult to get a new customer as opposed to retaining an already existing one. To reduce turnover and also generate revenue, Insurers now have a great incentive to sell car and motorcycle insurance policy to their home insurance customers or vice versa.
Underwriting is quick.
Similarly, every time a new policy has to be written, a customer needs to be assessed through a process called underwriting; the policyholder’s qualities such as occupation, income, credit history, place of residence, and driving record are fed into a database and analyzed.
Therefore, if an insurer has already put one of its clients through underwriting for a single policy, it is reasonable that it will be inexpensive to analyze them for another policy as compared to a new customer who is yet to undergo the underwriting process. This cost of saving is one of the main reasons why insurers provide incentives for bundling to current customers.
These discounts are usually quite significant. Discounts on every premium, such as for car and motorcycle insurance could be as much as 30%. Additionally, some of the best cuts are usually enjoyed by customers who go for more than two lines of insurance while those with less coverage enjoy fewer discounts.
The Pros and Cons of Bundling
One of the benefits of insurance bundling is the discounts that the customers receive. This is often a strategy insurance companies use to reward the loyalty of their customers, usually with some savings of your auto insurance policy. If you are bundling more than one automotive and driver, you will enjoy even higher discounts.
This is important…
Bundling different insurance policies could also eliminate the hassle often associated with having to use multiple companies and agents as well as give you some peace of mind.
Having all your policies under a single company means that you will only have a single bill, a single renewal date, and only one insurance professional. This could also come in handy when you have some queries or need to make an insurance claim. Better yet, your agent can identify you and your policies and let you know of any potential exposures or risks.
If you fail to do some intensive research and look at multiple companies, you might end up not receiving the best price or all discounts available for you. It is essential that you speak with your agent every year to ascertain that your policy is up to date and whether any new potential discounts have been applied.
Changing your commute, getting married, putting a new addition to your home or a pool in your current backyard, having a new driver or newborn in your household alters your insurance needs, discounts, and costs. It is therefore vital that you regularly update your insurance, even when you have bundled policies to make sure that the coverage is adequate.
How Much of Discount Do You Receive When You Bundle?
The amount you will save when you bundle your policies often depends on the insurance policies you are bundling, with whom you are taking the policies and in some instances when you are taking the policies. Companies often have different policies so you will need to research each.
With insurance companies like Allstate and State Farm, some of the highest discounts will come when you combine two expensive policies. Taking auto insurance policies in the state of Alabama for instance, you will discover that you can get up to 15% discount when you bundle it with a homeowner’s policy.
On the contrary, combining the same auto insurance policies with renters insurance coverage gives you a 10% discount. Some insurance companies like GEICO are not concerned with the policies you bundle but give you a 3% flat discount.
And with Progressive, things can be a bit trickier because your discount not only depends on what you are bundling but also the number of things you are bundling and the time you are bundling them.
Should You Try Bundling?
There is no question that you will save money with the car and motorcycle insurance combined under one insurer. However, the question is how much money you can save compared to other options that you can take advantage.
Discounts: Consider that it may be more advantageous to separate your auto and motorcycle insurance if separate companies offer deeper discounts.
For example, one insurance company that may specialize in offering cheap motorcycle policies may have considerably higher prices for their auto. So, trying to combine under one insurer may be more expensive that paying two separate insurers.
Convenience: It is true that paying one insurance company is easier than paying two. That might be good enough to combine your auto and motorcycle insurance. Keep in mind that many insurance companies also offer discounts for adding a new policy, such at the 10% discount GEICO offers for new motorcycle insurance.
The Bottom Line:
Before you can go for bundling, you need to bear in mind that it is only sensible when it gives you the best deal. Your insurance company could advertise it heavily, but you will need to shop around before committing to anything.