3 questions to ask yourself before bundling insurance coverage
Until you answer these questions, you shouldn’t assume that consolidation is always the best decision.
- Bundling coverage means buying multiple policies from the same insurer.
- It makes sense to bundle coverage in many circumstances because you can get discounts.
- Bundling isn’t right for everyone, however, it pays to ask a few key questions, like is it really cheaper.
Many insurers advertise discounts for bundled policies. Bundling means getting multiple types of coverage from the same insurer. For example, it is very common for people to bundle their auto insurance with their home or tenant insurance.
While it can be tempting to try to get most or all of the necessary policies from the same company, consumers shouldn’t assume that bundling is always the best bet. In fact, before deciding to go this route, there are three questions every insurance buyer should ask themselves. Here is what they are.
1. Is it really cheaper?
Many insurers promote the discounts resulting from bundling as a reason to purchase multiple policies from the same company. But while it’s possible to save money off the insurer’s standard price with this approach, that doesn’t necessarily mean coverage will be cheaper in all cases.
Suppose, for example, that a particular company offers very low car insurance premiums, but its home insurance costs are skyrocketing. Bundling these two fonts might not be the cheapest option, even with the discount. It may be better to buy auto insurance, but get home insurance coverage elsewhere.
The best way to find out is to compare the costs of different insurers for each policy, with and without multi-policy discounts, to see the best overall price.
2. Does the insurer offer the right coverage?
The goal of buying insurance is not just to pay the lowest possible premiums. It involves transferring the risk of loss to an insurer. Therefore, it makes little sense to bundle coverages if the insurer does not offer the necessary protections with one of the policies.
For example, a driver might be interested in purchasing auto insurance for their classic car that ensures they can purchase the specific custom parts they need if something goes wrong with the vehicle. If he has homeowners insurance with a company that won’t offer that protection but instead offers minimal auto insurance coverage with no guarantee that he can fully restore his old vehicle if something goes wrong, that wouldn’t be much use. sense for him to combine home and automobile insurance with this company.
To confirm that bundling makes sense, independently review each type of insurance coverage offered by the company and confirm that none of the desired protections are missing.
3. Will the insurer handle claims effectively?
Finally, it is important to consider the insurer’s reputation for handling different types of claims before bundling coverage. The quality of customer service can sometimes vary according to the different types of complaints. It wouldn’t make sense to bundle coverage if an insurer is good at handling auto claims, but has a reputation for minimizing home repair costs after a covered claim.
Considering these questions, consumers can decide whether they want to bundle insurance coverage or whether buying separate policies from different insurers would ultimately be the right choice. It is important not to default to grouping in every situation, but to make the individual choice which is best, given all the parameters at play.