“Should You Bundle Home and Auto Insurance? A Comprehensive Guide”

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Benefits of Bundling Your Home and Auto Insurance

Home and auto insurance provide peace of mind, but high insurance premiums can leave you feeling financially frazzled. Bundling your home and auto insurance can help you save money and make it easier to manage your insurance policies.

Bundling means buying two or more insurance policies from the same insurance company. Home and auto insurance are frequently bundled types of coverage, likely because bundling these policies typically generates big savings. However, you may also be able to bundle life insurance, renters insurance, condo insurance or insurance for motorcycles and boats. These other combinations can save you money too.

Benefits of Bundling Your Home and Auto Insurance

There are several potential benefits to bundling your home and car insurance.

May Lower Your Premiums

Most insurance companies offer discounts for purchasing multiple insurance policies. Also known as a multi-policy or multi-line discount, having more than one policy with the same insurer can mean significant savings. For example, Progressive says new customers can save more than 20% on average by bundling home and auto insurance. State Farm cites average savings of $1,073 annually. That’s a nice chunk of money you could put toward financial goals such as saving for your emergency fund, retirement or a big vacation.

Simplifies Account Management

Missing an insurance premium payment could cause your coverage to lapse, leaving your home or car unprotected. Choosing one insurance company for both homeowners and car insurance streamlines account management so you’re less likely to forget a payment due date.

With bundled coverage, you can set up just one account, download one company’s mobile app and schedule automatic bill payments in one place. (Bonus: Automatic payments may earn you additional discounts.) If you have a claim involving both your car and your home, you can deal with a single insurance carrier and agent to get them resolved.

You Could Save on Deductibles

Sometimes a covered event damages both your home and your car—for instance, a tree branch falls on your roof before hitting your car. If you have bundled home and auto insurance, some insurance companies charge you only one deductible for such events. With policies from two separate insurers, you’d be on the hook for two separate deductibles.

Disadvantages of Bundling Your Home and Auto Insurance

There are also a few drawbacks to bundling home and car insurance.

You May Not Find the Plan You Need

If you have specialized insurance needs, there may not be one insurer that offers the combination of home and auto coverage you want. For example, if you have a record of unsafe driving, your best bet for car insurance might be a company that specializes in high-risk drivers and doesn’t offer home insurance. Similarly, homeowners in wildfire zones may need to turn to state insurance pools or surplus line insurance carriers that don’t sell car insurance.

Separate Policies Might Be Cheaper

Although bundling home and auto insurance typically reduces your premiums, it doesn’t always deliver the biggest savings. Discounts for bundling home and auto insurance can vary widely depending on your location, the insurance carrier and other factors. For instance, Allstate reports that the average customer saves 25% by bundling, but says its customers in California save just 2% on average.

Bundling isn’t the only way to earn insurance discounts either. You might receive car insurance discounts for getting good grades, taking a defensive driving course or having an alternative-fuel vehicle. Home insurance carriers might give discounts for retirees or for installing devices such as burglar alarms to help reduce risk. Switching to a different insurance provider will cost you any existing loyalty discounts. Depending on the discounts you qualify for, you might pay less by purchasing home and auto insurance from different companies.

It May Keep You From Shopping Around

It’s a good idea to shop around for home and auto insurance every year or so to see if you can find better rates. However, once you have multiple policies with the same insurer or a relationship with one insurance agent, switching insurance carriers might seem like such a hassle that you no longer bother to price shop. Unless you compare prices on a regular basis, you may not notice your premiums are gradually rising, ultimately costing you more money.

Is it a Good Idea to Bundle Home and Auto Insurance?

Bundling home and auto insurance can make sense if it will reduce your premiums while still providing the coverage you need. Before deciding to bundle your homeowners and car insurance, do some comparison shopping to see how much money it will save.

Tips for Bundling Your Insurance Policies

If you’re thinking of bundling your home and car insurance, your current insurance providers are a good place to start. Contact each carrier to find out how bundling would affect your premiums. Ask about any other discounts or policy adjustments that could save you money.

Next, get quotes from other insurance companies for bundled policies as well as individual car and home insurance coverage. You can get insurance quotes by contacting insurance companies or independent insurance agents directly or visiting insurance websites to get quotes online. Using an online service like Experian’s insurance comparison tool can simplify the process by providing multiple quotes from different insurance carriers all in one place.

Be sure you’re comparing the same type and amount of coverage and the same deductible with each insurance company. Compare the lowest-cost bundled policies to the lowest-cost individual policies to see which offers the best price.

How to Bundle Home and Auto Insurance

Once you’ve evaluated all your insurance quotes and chosen the best option, you’ll need to apply for a new insurance policy and cancel the old one. Whether you’re switching your home insurance, your auto insurance or both to a new insurance carrier, the process is typically the same.

Submit an Application

Your application for home or auto insurance may be approved right away if you’re purchasing the plan online, or may take a few days if you work with an insurance agent.

Pay Your Premium

Once your application is approved, you’ll need to pay the premiums to activate your coverage. Some insurers offer discounts for paying your premiums in full, receiving statements digitally or setting up autopay. You usually have the option to make monthly payments if that works better for your budget.

Cancel Your Existing Insurance

Make sure your new coverage is active and you have proof of insurance before canceling your old policy. Going without car or home insurance for even a day is risky. Calling the insurance company is generally the fastest way to cancel your coverage; you may also be able to cancel by mail or email. Be sure to get written confirmation of the cancellation.

Receive Any Refund Due to You

When you cancel your insurance policy, you’ll typically get a prorated refund of your premiums. Some insurance companies may charge a fee as a penalty for canceling your policy before its term expires.

The Bottom Line

Bundling your home and auto insurance can lower your insurance premiums, but it’s important to consider all your options before making this decision. Improving your credit score could also help you save money on car and home insurance. In most states, insurance companies can check your credit-based insurance score when determining your premiums. A poor score shouldn’t keep you from getting insurance, but it generally means higher premiums.

Credit-based insurance scores differ from FICO® Scores☉ but are based on many of the same factors. Checking your credit score can give you a good idea of whether taking steps to improve your credit could save you money on insurance.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you with all your mortgage needs!

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