3 Questions to Ask Yourself Before Bundling Insurance Coverage
- Bundling coverage means buying multiple policies from the same insurer.
- It's smart to bundle coverage under many circumstances because you can get discounts.
- Bundling isn't right for everyone, though, so it pays to ask yourself a few key questions, like is it really cheaper.
Until you answer these questions, you shouldn't assume bundling is always the best move.
Many insurers advertise discounts for bundling policies. Bundling means getting multiple kinds of coverage from the same insurer. For example, it's very common for people to bundle their auto insurance with either their homeowners insurance or their renters insurance.
While it may be tempting to try to get most or all necessary policies from the same company, consumers should not assume 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's what they are.
1. Is this really cheaper?
Many insurers promote the discounts that come from bundling as a reason to buy multiple policies from the same company. But while it is possible to save money off the insurer's standard price with this approach, that doesn't necessarily mean that coverage will be cheaper in every case.
Say, for example, a particular company offers very low premiums on car insurance -- but its homeowners insurance costs are through the roof. Bundling these two policies may not be the cheapest option, even with the discount. It may be better to buy the car insurance, but get the home insurance coverage elsewhere.
The best way to find this out is to compare costs from different insurers for each policy, both with and without a multi-policy discount, to see the best price overall.
2. Does the insurer offer the right coverage?
The purpose of buying insurance isn't just to pay the lowest premiums possible. It's to transfer the risk of loss to an insurer. As a result, it makes little sense to bundle coverage if the insurer doesn't offer the necessary protections with one of the policies.
For instance, a driver might be interested in getting auto insurance for his classic car that guarantees he can buy the specific custom-made parts he needs if something goes wrong with the vehicle. If he has home insurance with a company that won't offer this protection but that would instead offer only minimum car insurance coverage with no guarantee of being able to fully restore his older vehicle in the event of a problem, it would make little sense for him to bundle home and auto insurance with that company.
To confirm that bundling makes sense, look independently at 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's important to consider the insurer's reputation for handling different kinds of claims before bundling coverage. Customer service quality can sometimes vary with different types of claims. It wouldn't be a smart move to bundle coverage if an insurer is great at handling auto claims but has a reputation for lowballing home repair costs after a covered loss.
By considering these issues, consumers can decide if they want to bundle insurance coverage or if buying separate policies from different carriers would be the right choice in the end. It's important not to default to bundling in every situation, but to make the individual choice that's best, given all the parameters in play.
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