If you watch television at all, you are bombarded with auto insurance advertisements. One theme of these commercials is the “bundling” concept for the insurance companies. Bundling usually means combining one or more insurance products with the same insurance company—typically, your auto and home. Why is this a great idea for you? Some companies give huge discounts for each policy. This means, the more you buy, the less it costs.
Reasons to Bundle
1) A good agent schedules a meeting with you to review your account at least every 2 years. Completing reviews will take more of your time if you need to talk with two different agents. Having your policies bundled, allows a single agent to review all your coverage in one sitting. Not only will you save time, but often you can consolidate billing for all of your policies.
2) Another advantage of bundling is the combined deductible. A deductible is the amount you pay out of your pocket when you have a claim before the insurance company pays a dime. Many of our companies offer a combined deductible which means if you have your home and auto with one company, and you have a claim on both the auto and home, you only pay one deductible instead of two. For example, if a tree fell during a wind storm and hit your house and one or even more, of your cars, you would only pay one deductible If you have your insurance with a company who uses the combined deductible. Usually you pay the highest of the deductibles, but I actually have one company where you pay the lowest of these two deductibles. If you had your insurance with two different companies, you will definitely pay two different deductibles.
Let’s talk real money here. A tree falls and hits your home and one auto. In this situation with two different insurance companies, you would pay your comprehensive auto deductible of $500 and your home deductible of $1000 for a total of $1500. If your insurance was bundled and the combined deductible used, you would pay the $1000 home deductible; a savings of $500. Again, this is money out of YOUR pocket.
3) Time is money in today’s society. We want things done within seconds. Having to make multiple calls to discuss your insurance needs takes valuable time that could be used doing something more productive. The advantage of being an independent agent is our ability to be a one-stop shop. Representing multiple insurance companies allows us to place your insurance policies with a company that fits you. An independent agent can do the shopping for you, so you don’t have to call six different agencies to make sure you are getting a “good deal.” Having only one place to call makes it easy for you. You get to know the staff and become part of the team.
4) Now we come to maybe the most important reason to bundle: premium savings. Obviously, cost is a high priority for many auto insurance shoppers. As an independent agent representing many companies, the multi-policy discount ranges from 12% to 30% on each policy. Let’s say your annual auto premium is $1200, and your home premium is $1000. With the 30% discount on each, the savings would be $660 per year. Add another 5% for an umbrella policy and that’s another $100 savings. That’s real money. Also, as you can see from the tree example above, we are not only talking about savings at inception time of the policy but also possibly at claim time.
We have clients who call to get a proposal on their new home purchase and want to get their premium to a certain range but don’t want to combine their auto and home coverages. Why would you discard the 15-30% savings available to you?
5) Let your agent do their job. Completing a risk assessment for you without all the information is like making a cake and leaving out the flour. Not having all your policies in one place is setting yourself up for a gap in coverage.
An example would be having your auto, home and umbrella with one company and your rental properties with another agency. Your umbrella has minimum underlying liability limits, so you will not have any out of pocket expense. The agent who writes your rental property policy only writes $100,000 in liability limits because they don’t realize you have an umbrella policy. EVERY agent should discuss this with you, but let’s face it, there are some bad agents our there. Any way, your renter suffers a fall on your property and breaks a leg. They cannot work and do not have medical insurance. You are sued for $500,000. You have $100,000 (bad idea but I see this all the time) in liability.
You call your agent who has your umbrella to report the claim. Your agent advises you that the minimum underlying liability limits required for your umbrella is $300,000. This gap is going to cost you $200,000; you must pay the $200,000 to get to the $300,00 BEFORE your umbrella will pay. As you can see, the gap can be devasting for you. Having one agent to oversee your entire insurance program can eliminate these gaps.
6) There’s more happiness in combining your insurance policies. A 2012 J.D. Power study showed that clients felt happier, safer and more protected when their auto and homeowners insurance were with the same company or agency. This happiness is not shared by all groups. Millennials were less satisfied with their homeowners insurance than other groups according to the 2015 J.D. Power Household Insurance study. This dissatisfaction could be due to the 35% of millennials who do not bundle their insurance policies.
7) Finally, here’s a secret most companies won’t admit. You are in a much better situation after a claim if your insurance is bundled. Insurance companies are in business to make a profit. Having all your insurance is much more profitable for the insurance company. If you have your home and auto insurance with different companies and experience a home claim during the year, you are a prime target for non-renewal of your home policy.
I’ve heard stories where clients chose an agency that wrote their home only. In their first year of home ownership, they experienced a claim, and at renewal time they received a non-renewal from their home company. If you are in this situation, you have a home claim and a non-renewal on your record. You will pay twice the amount for your homeowners insurance now. Also, think about if you get a speeding ticket and have an accident? What will happen to your auto policy?
Bundling makes sense both monetarily and time wise. Some companies also give discounts for other policies as well. Typically, each policy added gives another layer of discount. One of the fastest ways to get a bundled proposal from several companies is to contact a local independent agent (that’s me!) who will shop several companies for you. We can take the time, hassle and inconvenience of shopping away for you and maximize discounts. Not all companies and agents are created equally…choose wisely.