Is bundling insurance better?

To protect yourself, your property and your family, you might need numerous insurance policies. Many people assume that the best and cheapest method is to purchase them as a bundle from a single company, but is this true?

The benefits of bundling insurance

Generally, there are two primary benefits to bundling your insurance with a single provider. First, they usually offer discounts for doing so—sometimes up to 25 percent off additional policies. Second, opting for one stop shopping takes less time and effort than bouncing around to compare prices. Even paying for the policies afterwards is easier, as you only have to work with one company.

Approaching bundling strategically

If the goal is to save money rather than maximize convenience, bundling all your policies is usually not the best way to go. Instead, bundle the most expensive policies and shop around for the smaller policies.

Why? Many companies will offer a discount in the range of 5-25 percent if you bundle at least two policies. Let’s assume a discount on the low end at five percent. Five percent of expensive policies—homeowner’s and health insurance—can be a hefty amount, and shopping around for a cheaper option is unlikely to beat the discount offered. But for cheaper policies, like car insurance, going with a more affordable provider could beat that five percent discount.

Do not become compliant

One disadvantage of bundling is that the insured tend to just accept their rates going forward rather than reevaluating every year. Because a lot can change in the insurance world from year to year, this can mean overpaying by a significant amount. Even if bundling insurance, it is important to reevaluate your coverage once a year and be ready to switch providers if someone else is offering you something better.

Simplifying the search

Shopping around and comparing options is difficult and time consuming. However, you do not need to handle the process on your own. Independent insurance brokers can connect you with policies that are best suited for your needs.