Advantages and disadvantages of bundled insurance coverage

Most insurance companies offer a discount for bundled coverage. Essentially, this means that it is possible to save money on insurance by purchasing several different policies from the same insurance company. These can be home and auto policies, life and renters policies, or any combination of different types of coverage.

Before deciding to bundle, however, it’s important to consider both the pros and cons of this approach.

Benefits of bundled insurance coverage

Here are some of the main advantages of bundling different insurance policies by purchasing them from the same company.

  • Cost savings: The savings from purchasing several different policies with the same insurer can often be substantial. Although the specific discounts provided depend on the insurer and the types and number of policies written, it is possible to save more than 15% on premiums in many cases. This can sometimes mean that buying a blanket costs a lot less.
  • Convenience: Buying multiple policies from the same insurer can be easier than getting several separate policies from different companies. Often, multiple policies can be managed from the same online account or purchased from the same insurance agent. And if something is wrong and there is a lack of clarity as to what type of insurance will cover it, then there is no need to involve multiple insurers to resolve the issue.

Disadvantages of Bundled Insurance Coverage

Unfortunately, bundling can also have some drawbacks. This is what they are

  • Fonts aren’t always the cheapest: Although insurers offer discounts for bundled policies, this does not necessarily mean that the total combined cost of coverage will always be cheaper. Suppose, for example, that a company offers very affordable auto insurance coverage, but very expensive home insurance. Combining the two policies may not offer enough discounts to offset high home insurance premiums. It may be less expensive to just get auto insurance and buy a cheap home insurance policy from another insurer, even after you factor in the bundling discount.
  • The quality of the coverage could suffer: In some cases, insurers are good at handling claims and providing comprehensive coverage with some types of policies, but not as well with others. For example, an insurer may have an incredible reputation for processing owner insurance claims quickly, but a very bad reputation for processing boat insurance claims. In this case, it may not make sense to bundle these types of coverage with this insurer.

Is bundling the best choice?

While it can be tempting to bundle policies together by default due to the resulting discounts, consumers looking for insurance shouldn’t necessarily take this approach. Instead, it’s best to get quotes for individual policies as well as bundled coverage from a variety of different insurers to see which options offer the lowest overall rates.

It is also important to compare customer reviews and claims handling data from different insurers to ensure that using coverage will not prove to be too difficult. If an insurance company doesn’t have a good reputation for offering a specific type of coverage, don’t buy it just to bundle up. After all, while saving money on insurance premiums is a good thing, the whole point of insurance is to provide protection – and finding an insurer who runs that should be the main goal.

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Justin D. O'Neill