Secrets of the Bundle: When Can You Save by Combining Insurance Policies?

Can you get a better deal if you bundle insurance policies for your house and car?

sailor's knot

Tied down by expensive car insurance? Click to compare hundreds of rates instantly →

Nothing can make even the savviest of consumers’ eyes glaze over quite like the phrase “insurance bundling.” And we get it—insurance products and policy details aren’t exactly the most riveting of topics, but hang on with us for a moment because that disinterest can end up costing you a lot of money and can create hassle down the line.

In this round of demystifying the insurance industry, we take on more than just auto insurance. Our own insurance expert (and former agent for a national big-name insurance company), Neil Richardson, fills us in on the what, why, and how of insurance bundling so you can get through the process as painlessly as possible, all while making sure you’ve got the coverage you need and you aren’t overpaying.

van parked in front of house

Which Types of Insurance Policies Can You Bundle?

Most big-name national insurers—and many smaller regional ones, too—offer their customers the option of combining different insurance policies. Depending on the company and region, auto insurance can be bundled with homeownersrenters, and life insurance, and customers can add motorcycle insurance, boat insurance, or other specialty insurance coverage options.

What’s the Benefit of Bundling?

The biggest reasons to bundle—according to both insurance companies and Neil—are convenience and discount incentives. The incentives can often be substantial, and therefore enticing, says Neil, but in order to really save over a long period of time, consumers need to go into the process aware of the downsides of bundling.

The biggest reasons to bundle are convenience and discount incentives.

The Downsides of Bundling

Unless customers carefully shop for all of their insurance policies by comparing rates both individually and as part of a bundle from a few different insurers (we’ll tell you how to actually do this below), insurance companies are likely to convince consumers of the ease of bundling. Neil explains that insurance companies know that the more products customers have with them, the less likely they are to switch companies.

  1. There isn’t incentive to shop around when a customer has bundled policies because if they switch, say, their auto insurance, they’ll lose the discount, and if they switch everything, it becomes very complicated very quickly. So, insurance companies can increase one policy a little and they know the customer will be unlikely to leave—this process of price optimization is used by some insurers throughout the auto industry, but Neil says the incentive to run business this way increases with insurance bundling because the consumer is even more driven by inertia.
  2. The prospect of simpler bill consolidation from bundling might not play out exactly as they plan. Insurance premiums are due each month on the date you opened your policy. So, if you get one policy on the 15th and then add another a few months or years later on the 3rd, you’ll still have bills due twice a month, even if the insurance is with the same company.
  3. A final downside: third-party lenders. Many insurance companies specializing in one type—say, auto—will give their customers the option of bundling other types of insurance—say, homeowner’s or life—but they will sometimes use a third party to underwrite additional policies. For instance, Progressive offers auto insurance and homeowner’s, but their homeowner’s insurance policies are underwritten by three different third-party lenders. The fact that one part of your bundle is underwritten by another company isn’t a bad thing in and of itself, says Neil, and reputable insurance companies will use good quality third parties. However, if one part of your bundle is underwritten by a second company, you’ll still need to deal with both companies in the event of a policy claim on both. An example: a major weather event causes damage to your house and your car, and though you have a bundle with one company, you’ll be dealing with two different insurers when making your claims and getting your reimbursements, just as you would if your policies weren’t bundled. The only real benefit of bundling in this case, Neil says, is the policy discount.

Bundling, says Neil, most often benefits the insurance company, but there are still ways to beat the house.

Red house in forest

Smart Bundling

If the convenience of bundling is a big draw—and if you’ve been quoted some deep discounts—bundling might be a good choice, but you’ll want to approach it the right way.

A simple rule of thumb: Shop for your most complicated and most expensive insurance policy first. If you’re a homeowner, that’s usually the biggest asset and most complicated insurance policy. Life insurance is also quite detailed and complicated. Auto insurance is more complicated and expensive than renter’s, so if you’re bundling the two, shop for auto first.

Bundling for Homeowners and Car Owners:

For people with houses and cars to insure, homeowners insurance is almost always the most complicated and most expensive insurance policy they have. Not only is your home likely to be your biggest asset, the process of properly insuring a home can be long and complicated. So if you own a home, start shopping for this one first.

While shopping for homeowners insurance, get quotes from several insurers, narrow it down to your top choices, and tell them that you might like to bundle your auto insurance policy into your homeowners, and see what kind of discounts you’re offered. Neil advises also shopping separately for auto insurance and comparing rates: even with a discount from your homeowners insurance company, you might still be better served with an auto insurance policy elsewhere—the savings might be higher, or you might like the coverage better. Usually the discount you’ll receive from bundling homeowners and auto insurance isn’t as great as if you compared rates for both and went with the best deal from two separate companies.

Get multiple home insurance quotes, narrow to your top few, and then ask to bundle auto too.

Bundling for Car Owners and Renters:

If you’re a renter, Neil advises searching for your auto insurance policy first since between auto and renters, auto is usually more complicated and more expensive. Again, if you find a great auto insurance policy, tell your top choices you might like to bundle renters, compare rates, and then get some quotes for just renters, too.

Benefits from bundling auto and renters insurance policies are often worth it, says Neil, because renters insurance is easy to switch. Homeowners and auto insurance bundling can still offer benefits, but the customer should be prepared to switch companies if rates increase.

Unbundling the Bundle

It’s frequently during a claim or other unfortunate scenario when customers realize their bundles aren’t actually as beneficial as they thought, Neil says. Usually people will see an increase in one rate, so they will switch one policy, lose the discount on the other, and then be stuck shopping for two insurance policies. It’s better to get ahead of this by evaluating if bundling is right for you now.

Our best advice when shopping for more than one insurance policy is to shop around, with the above tips in mind. Compare as many options as you can, and share quotes with various companies to see if they can offer competitive rates.


Originally contributed to