Insurance exists in the event that the unfortunate occurs. It is there to fully or partially offset any financial costs that are part of the rebuilding, recovery, and/or rehabilitation process. Many insurance agencies offer the option to combine–or bundle–your home and auto insurance policies. How can you know if bundling your home and auto insurance policies is right for you?
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Combining multiple forms of coverage can certainly streamline your personal finances, while also leading to cost savings. Whether it is right for you will depend on your individual circumstances.
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What Does It Mean to Bundle Your Insurance?
Bundling your home and auto insurance is a fairly straightforward proposition: you purchase a contract with one company for multiple types of insurance policies.
Most insurance companies offer to bundle various policies. Bundling home and auto insurance is a popular option, as these are usually the two largest assets that individuals and families will own.
Essentially, bundling your insurance policies means having one interlocuter for these different needs. These can often be under the same policy number, though this differs by insurance company.
Insurance companies compete with each other to attract customers, often by offering package deals. This can lead to cost savings reaching into the double-digits, though this varies by provider and the specifics of the respective policies.
What Are the Advantages of Bundling Insurance?
There are a number of reasons to consider bundling home and auto insurance. These include:
(1) Discounted costs: One of the biggest draws of bundling your accounts is the ability to save money by receiving discounts on the cost of your insurance premiums. Having multiple policies at a single location will make it less likely that you will change insurance providers, giving insurance companies a natural incentive to offer lower prices.
(2) Simple to manage: Streamlining multiple types of coverage is another advantage of bundling. Instead of needing to keep tabs on multiple bills and policies, bundling your insurance allows you to focus on just one account.
(3) Easier to file claims: Working with only one insurance agent can make it less painful to file claims that are related (see below).
(4) Combining deductibles: If the same incident impacts both your home and your car, some companies will allow you to combine your deductible. For instance, if a storm damages both your car and house, your insurance company may allow you to combine your deductible when filing your claim.
What Are the Disadvantages of Bundling?
However, there are also some disadvantages of bundling multiple types of insurance. They include:
(1) Might not be cheaper: Bundling is not always the most cost-friendly alternative. This is especially the case if you have a unique set of coverage needs. High-risk drivers–such as those possessing a DUI or a number of speeding tickets–might find cheaper alternatives for coverage from insurance providers who only specialize in car insurance.
(2) Harder to leave: Because you have multiple policies at one institution, moving your insurance to other agencies can be more of a hassle than if you are simply changing either your home or auto insurance.
(3) You could still deal with multiple parties: Bundling may not guarantee that you are only dealing with one client. Some insurance firms work with partner companies, forcing you to work with multiple parties if you do need to file a claim.
Is Bundling Right for You?
Like every personal finance decision, whether bundling is right for you depends on your specific situation.
For many individuals and families, bundling can serve as a good way to save money and reduce overhead. That being said, it is always a good idea to get quotes from multiple insurance providers to see who can provide your desired level of coverage for the best price.
Bundling will not make sense for everyone. For instance, if you have a more specialized need, the insurance provider best positioned to provide coverage may not offer a bundling option (or it might not be cheaper).
Make sure that you understand your coverage needs and the particulars of the insurance policies you are considering. This includes the premiums, deductibles, and scope of coverage, as well as other non-financial considerations, such as their customer service rankings and whether you might be forced to deal with a third-party.
Bundling could help you cut down on costs, though you can only know this for sure after conducting the research and understanding the various options at your disposal.
Conclusion: Protecting Yourself from the Unexpected
The purpose of every insurance instrument is to help you deal with the unexpected. While nobody ever wants to assume the worst, accidents do happen.
Bundling can be a cost-effective way to get the insurance you need. Whether it makes sense for your particular situation depends on your coverage needs and the options available to you.
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