Should You Bundle Your Home and Auto Insurance?
Should You Bundle Your Home and Auto Insurance?
Bundling home and auto insurance policies can help you save money, but comparing more than just your monthly premium helps you find the best coverage.Simplifying your insurance coverage by bundling home and auto policies with one provider can offer significant savings and convenience, making it almost a no-brainer. Of the 2,000 homeowners we surveyed, 64% said they bundle their home and auto insurance. Yet, the question remains: Should you bundle your home and auto insurance or purchase coverage separately for the best value?
Takeaways
- Most companies offer bundling discounts ranging from 10 to 25%, making it a potentially significant savings opportunity.
- The average cost of a home and auto bundle is $4,511 for a$350k dwelling coverage, $1k deductible, and auto profile is a 40 yr old male driver with no claims history or record.
- Thirty percent of bundled customers don’t shop for policies more often because they are bundled, potentially missing out on better deals.
- Homeowners with multiple vehicles, households with grown kids living at home, farmers, and small business owners benefit most from bundling policies.
- Single claims can impact both policies—if you file a major claim with one, you could see both home and auto premiums jump at renewal.
- Bundling is often necessary for umbrella policies; it’s typically easier or required to have both auto and home policies with the same insurance company to purchase additional umbrella liability coverage.
- Rate creep is a hidden risk—some insurers may quietly increase rates over time, counting on customer loyalty or inertia, which can erode the initial bundling discount benefits.
What Is Insurance Bundling and How Does It Work?
Consumers who purchase multiple insurance policies from the same provider “bundle” their coverage, typically to unlock discounts and additional benefits. For example, you can bundle insurance coverage for your home and auto through a single carrier, rather than insuring each through a separate provider. That way, you can consolidate coverage under one insurance company. According to Quadrant Information Services, the average cost of a home and auto bundle is $4,511 for a $350k dwelling coverage, $1k deductible, and auto profile is a 40 yr old male driver with no claims history or record.
“Think of bundling like the streaming services of the insurance world, except instead of Netflix and Hulu, it’s your home and car getting cozy under one provider,” says John Espenschied, agency principal at Insurance Brokers Group. Insurance providers often advertise bundling as a way to entice customers, with varying rates based on individual carriers, location, coverage limits, perceived risk, and specifics of the insured commodity (i.e., house, car, or pet).
Steven Gattuso, professor of economics and finance at Canisius University, adds “In bundling insurance the customer can reap several benefits. The first and most important is cost savings. There are usually substantial discounts (up to 25%) on both products when you bundle multiple policies. The second benefit is simplicity. When you have multiple policies under one carrier you will have one single point of contact for billing, customer service and even claims.”
When Bundling Saves Money (And When It Doesn't)
Admittedly, bundling insurance coverage can look pretty convincing on paper. However, streamlining policies with one insurance company can sometimes cost you more than just a few extra dollars per month. Read on to discover the benefits and pitfalls of bundling insurance policies.
The Sweet Spot for Savings
Savings on your annual premium is typically the biggest incentive to bundle multiple insurance policies, as many companies offer discounts ranging from 10% to 25%, according to CBS News. In addition, bundling insurance coverage—such as home and auto—can unlock the following benefits:
- Simplicity: a single monthly or annual premium
- Reduced policyholder risk
- Potential loyalty benefits
- Single deductible for multiple policies
Generally speaking, bundling home, auto, and other insurance policies can benefit most people, but certain populations may experience greater benefits than others. “Customers who are homeowners and own multiple vehicles, households with grown kids living in the house, farmers, and small business owners are more open to bundling policies and benefit most,” says Yibing Du, clinical assistant professor at The University of Texas at Arlington.
Ultimately, bundling offers the best value when you purchase higher levels of coverage, especially when the coverage applies to valuable assets. “Bundling is typically worthwhile when both assets—the home and vehicle—are insured at moderate to high values,” says Dr. Prachi Gala, associate professor at Kennesaw State University.
When Bundling Doesn’t Pay Off
Although bundling insurance coverage can qualify you for discounts, your savings may be greater on individual policies from separate insurers. “Some carriers advertise a bundled savings, then inflate base rates on one policy,” says Espenschied. “It’s like a grocery store putting chips on sale while quietly raising the price of soda.”
If you’re unhappy with your current service or looking for specialized insurance, not bundling your policies can also help you find the appropriate coverage, albeit at a potentially higher premium. “If a customer has a high risk in any category, the discount benefit may disappear,” says Du. An insurer’s perception of you as a high-risk customer can also affect your ability to obtain the best deal and the corresponding plan you need. For instance, if you’re a high-risk driver, the company that offers you the best benefits may not align with your home insurance needs.
Gattuso mentions, “Bundling doesn’t automatically mean lower insurance premiums… a person might be buying more insurance than they need to get the discount. In addition, some companies may increase the price of each coverage in order for the discount to look larger. One should be comparing total prices – not discount percentage.”
Are you a North Carolina Homeowner? Want to see if bundling saves you money? Guardian Service can show you bundled vs. separate quotes from multiple insurers side-by-side. Uniquely, Guardian Service can create a home and auto policy bundle across different providers, offering you the best coverage at the best price.
Benefits + Risks of Bundling
Understanding the full value of bundling insurance policies requires looking behind the curtain and closely inspecting the fine print. “One key risk of bundling is reduced flexibility,” says Dr. Gala, referencing the challenge of switching policies if another insurance carrier provides a better rate for the same or greater coverage. Policyholders should ask themselves not only what they gain by bundling, but also what they give up by working with a single provider.
| Benefits of Bundling | Risks of Bundling | Guardian Service |
|---|---|---|
| Cost Savings – Many insurers offer bundling discounts, typically between 10 and 25%. | Masked Costs – Some insurers raise base rates, making the discount less valuable. | Real Savings – Our members save an average of $895 annually by getting bundled policies across different providers. |
| Policy Management Convenience – Coordinating policies under one insurer can simplify updates and renewals. | Claims Affect Both Policies – A claim on one could raise premiums on both. | Simplicity – Zero-commission agents help you manage both policies. |
| Easier Access to Umbrella Coverage – Bundling often helps qualify for added liability protection. | Less Comparison Shopping – 30% of customers shop less often because they bundle. | Guardian Marketplace – A zero-commission agent will work with you to decide if you need an umbrella policy based on your assets and risk. |
| Could Save on Deductibles – When a claim affects both home and car (i.e., a tree falls on a car and the roof), some companies will only charge one deductible. | Coverage Gaps or Overlaps – Bundled policies might duplicate or miss coverage needs. | Understand Your Coverage – Guardian Service’s Guardian Risk IQ and zero-commission agents will help you gain a deeper understanding of your coverage, risk and deductible. |
| Loyalty Perks – Some insurers offer perks like priority claims service or extra discounts for bundlers. | Rate Creep – Some insurers gradually raise rates, assuming customer inertia and loyalty. | Continuously re-shops your insurance – one of the main perks of Guardian Service is our re-shopping technology to ensure you get the best price, always**.** |
The Benefits Beyond Savings
In addition to saving you money, bundling makes it easier to manage your policies via a single point of contact. “It can simplify things since the insured is only dealing with one company,” says Thomas Faulconer, clinical professor at Butler University. Some insurance providers also consolidate deductibles, so you only pay once for multiple types of coverage.
Policyholders can also benefit from easier qualifications for additional liability coverage. “Often it is necessary (and easier) to have both the auto and home policies with the same insurance company to purchase an umbrella policy,” says Thomas J. Simeone, trial attorney and managing partner at Simeone & Miller, LLP. Additional loyalty perks include priority claims service and further discounts.
The Hidden Risks
The unfortunate side effect of bundling multiple insurance policies is that it keeps many customers from comparison shopping to ensure they’re getting the best value—that is, the most coverage for the lowest rate. “Bundling is an incentive to get your business, but if you stay with the same insurer year after year, it’s possible that the initial discount may be lost,” says Angelo Decandia, instructor at Touro’s New York School of Career and Applied Studies. According to our survey, 30% of respondents don’t shop for policies more often because they’re already bundled.
While consumers may receive an initial discount for bundling, insurance rates can creep up over time and erode any savings. “Some insurers may quietly increase rates over time, counting on your loyalty or inertia,” says Espenschied. Insurance providers may also start with a higher premium before applying any bundling discounts, thereby cancelling out any savings benefit.
Claims on one policy can also risk premium increases for the entire bundle. “If you file a major claim, like your teenager backing into your garage door (yes, it happens), you could see both premiums jump at renewal,” says Espenschied.
Similarly, Gattuso mentions, “Since you are with the same carrier they will know the claims history on both policies. If you have a claim with one type of insurance it could result in an increased premium for your entire bundle. A claim generally raises your risk profile with the insurer and it could affect more than one policy type.”
Multiple policies may also cover the same event twice over or leave you with critical gaps in coverage. “Bundling often results in an overlap of coverage. A common example can be found with comprehensive auto insurance, which covers damage to your car from a non-collision event, such as a tree falling on a car. It’s possible that homeowner’s insurance may already cover such an event, so why pay twice for the same coverage?” says Decandia.
How to Decide: Is Bundling Right for You?
Due to the popularity of bundling home and auto insurance—and other insurance policies—providers often attract customers by pricing their policies competitively. “Because homeowners and auto insurance are basically commodities now, the variable becomes price,” says Faulconer. However, a “smart shopper would be wise to price each type of insurance individually with multiple carriers and compare the overall cost with the quoted cost of an insurance bundle,” says DeCandia.
Comparing policies based on coverage, not just cost, can also help you find the best value, even if it means paying more than the lowest rate. “Make sure the coverages are the same (and sufficient for you) and that the companies are sound and easy to deal with,” says Simeone.
Finding the right insurance for you can get complicated fast, which is why Guardian Service simplifies the shopping experience. Between our zero-commission agents and your ability to compare rates from over 30 carriers via the Guardian Marketplace, you can quickly and confidently decide if bundling delivers the best value. We help you understand your coverage and keep you informed of proactive savings alerts to ensure you’re always getting the best rate.
Bottom Line
When shopping for multi-faceted insurance coverage, always request quotes for individual policies and bundled services separately to compare costs effectively. Strike a balance between adequate coverage and cost savings to achieve maximum value, but don’t overlook service quality.
Review your policies annually to avoid getting complacent with bundling discounts. Consider your risk profile to anticipate where insurance providers may adjust your policy rate and nullify any bundling benefits. For example, if you received a speeding ticket after bundling your home and auto insurance, the resulting premium increase could cost you more than obtaining separate policies and paying only a higher rate for your auto insurance policy.
If you don’t have time to compare every quote, call Guardian Service at (844) 910-4158. Our zero-commission agents can help you find the best policy for your circumstances, so you can rest assured you’re covered under competitive rates.