Bundling insurance policies means purchasing two or more kinds of insurance products from the same company. Purchasing insurance products this way is also referred to as multi-line policy, and it has become increasingly available over the last few years. A survey conducted in 2011 by J. D. Power and Associates showed that 77 % of clients bundle their motor vehicle policies with other policies and 58% of clients bundle their home insurance and motor vehicle policies with their current insurance companies.
According to Amy Bach, the executive director at United Policyholders (a not-for-profit consumer information body),insurers are happy when you bundle insurance policies because in the end they make more money. Bundled policies also provide the insurers with more access to your past claims history so they can understand you better. This information should not affect the policy quotes, which are formulated using algorithms to evaluate and set the price for your particular risk.
Generally, it is cost effective to bundle insurance quotes, but the rates and discounts provided differ. Amy Danise of insure.com notes that for instance when you bundle home insurance and auto insurance, the discounts offered may vary between 3% and 22%.To help you assess your insurance quotes, here some advantages and disadvantages of bundled insurance policies and tips that will assist you to get the highest discount:
The advantages of bundling your insurance policies
The discounts offered by insurers
According to Laura Adams from InsuranceQuotes.com, the greatest benefit of bundling insurance policies to the consumer are the discounts offered. This is how the insurance company rewards your customer loyalty-normally by reducing the cost of your motor vehicle insurance policy.
Bundling several insurance products can minimize the stress that comes with having several insurance providers. When all your insurance coverage is concentrated within one company, you only have to deal with one bill and one insurance sales representative. This can be beneficial in case you have any queries.
Your insurance company will be reluctant to drop you- even during bad times
When you bundle your insurance policies, you immediately become more valuable to your insurer. In case you experience a bad year and make several auto insurance claims, your insurance company can be tempted to decline giving you coverage-unless you have taken out multiple policies with them.
The disadvantages of bundling your insurance policies:
Missing out on better discounts elsewhere
Failure to research on various companies and only listening to your current insurance company means you will miss out on potentially better discounts. Adam notes that failure to shop around might make you settle for mediocrity.
Inadequate Policies that have been left behind by changed circumstances
There are a lot of things that may change your insurance costs, requirements and discounts- for example having children, moving to a new house or getting married. This makes it crucial to update your insurance frequently-even if you have bundled policies-in order to make sure you have sufficient coverage.
How you can get the best discounts:
Look for various kinds of quotes
Get quotes from independent agents (who deal with products from various companies) and captive agents (who deal with products from one company).Usually, independent agents offer more choices whereas captive agents typically have longer experience records.
Analyze the entire package
When you are evaluating bundled insurance policies,apart from the premiums you also need to look at the deductibles and other features. Danise asserts that while the discount might be in double digits, always ensure that you have assessed the total cost.
Remember the other elements of the insurance plan
Even though you want to get the highest discount, look at the other elements of a plan that are crucial to you, for example being allowed to use your neighborhood mechanic in case you have to make an auto insurance claim.
A lot of insurers deal with different claims effectively, although some companies specialize in particular categories like home insurance, accident claims and motor vehicle insurance. According to Bachs, it is advisable to insure your home with an insurance company that successfully concentrates on dealing with home claims and your car with an insurer that has a good reputation for settling auto claims.
Follow your instincts. Bundled insurance policies are cost-effective, therefore ensure that you find out what bundling options are on offer. However, trust your instincts in the end. Adam notes that people choose the insurance company that they are comfortable with.