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Auto insurance is both mandatory and necessary. Almost every state has made getting liability insurance mandatory for every driver. While some are mandatory, optional insurance policies such as collision and comprehensive coverage are also very important.
Some states require you to get a personal injury protection plan and uninsured motorist coverage as well. Add the cost of all these expensive car insurance policies and you already have a long bill. But cars are not the only insurance policies you need.
Apart from car insurance, getting home insurance is equally important. Both cars and houses are expensive investments that need to be protected. But all this leads to expensive insurance premiums and managing different scattered policies is a headache.
You must have considered bundling your home and auto insurance. But is it the right thing to do? Let’s look at all the pros and cons of bundling your home and auto insurance so that you can make a smarter decision.
What is Bundling
What do we mean by “bundling”? Since people need different types of insurance policies such as house insurance, renters insurance, auto insurance, etc, some companies that sell different types of insurance policies allow people to “bundle” multiple policies together.
So instead of getting car insurance from Allstate and home insurance from Progressive, you can get both from a single company. Selling more policies means more profit for the insurer, so they offer some benefits to the policyholders as well.
Let’s look at some of the benefits of bundling home insurance and auto insurance. But let’s not stop at that. We’ll take a look at the negative points as well so that you can weigh both options and make the right decision.
Pros of Bundling
Here are all the benefits of getting home insurance and car insurance from the same company and bundling them:
Lower Costs
What’s the most impactful incentive a company can give to buyers to win their hard-earned money? Discounts. The biggest reason why people choose to bundle policies is that it gives discounts.
So if you buy home and car insurance policies from the same insurer and bundle them, you’ll get a discount on the combined cost of the policy. The discount range depends on how many policies you bundle together, but a ballpark figure would be anywhere between 4% to 10%.
Different states have different rules and regulations. You might get better discounts in some states. For example, if you live in Wisconsin, get the car insurance quote in Wisconsin, and then compare the price to the bundled price. This will give you a good idea of the discount you are getting.
Convenient Management
Discounts are not the only benefit of bundling home and car insurance policies. It is better to manage multiple policies from a single dashboard than getting different applications, going through two or more separate processes of payment, etc.
When you bundle multiple policies together, you can get all the relevant information about different policies such as expiration date, premium rates, etc in one simple place. What’s even better is all the payments for insurance premiums for different policies can be done in one single payment. Isn’t that convenient?
Better Discounts
Not just discounts for the policies you own, insurers want policyholders to buy more policies. And to encourage this, these companies offer better discounts, deals, etc. So in case you already own home and auto insurance and want to get health insurance, you’ll get better prices if you have already bundled your policies.
Cons of Bundling
If everything about bundling home and car insurance policies is positive and beneficial, there wouldn’t be a need for this article. There are some major cons of bundling insurance, especially for some specific groups of people. Let’s take a look at the cons.
Getting Locked in
The first and most obvious con of bundling insurance is you get locked in. Since you need to buy the policies from the same company, you’ll have to go with only one company. This could lead to problems.
For example, some insurance companies can be a great option for car insurance but a terrible one for home insurance or vice versa. This is why understand your needs first, then look at the coverage the company is offering. If everything fits well, then go for the same company and bundle the insurance policies.
Losing Better Options
The second con is tied to the first con. Not only you might have to stick with the same company for both home and car insurance, but you might also miss out on some other great insurance providers.
For example, let’s say that you choose a company for both home and car insurance and get a sweet discount of 10% on the total price. But what about some other great car insurance company that offers only that, but better coverage at a slightly higher price?
It all comes down to preference. Are you willing to pay a tad bit extra and get a far better car insurance policy or stick with the bundled option and get a minor discount and the major convenience of managing policies?
Also, for people who have poor driving records with speeding tickets, or some serious traffic violations such as DUI, it gets very difficult to find the most affordable car insurance companies. For these people, it is better to get home insurance from one company and auto insurance from the company that offers the best price.
So on one side, you get discounts and convenience if you bundle home and car insurance policies, but on the other side, you miss out on the better options and get locked in with one company. To make the best purchase, select what you value more and the compromises you can stay with.
Photo by Vlad Deep on Unsplash