4 Reasons You Definitely Want to Bundle Your Insurance Policies

When buying insurance, chances are good consumers will be encouraged to purchase multiple policies from the same carrier. This is often called bundling coverage, and consumers are typically offered a discount for it.

There are some definite advantages to bundling, so it's worth thinking about whether it makes sense to get home insurance, auto insurance, and other policies from just one source. In fact, here are four considerations that provide compelling evidence that bundling is the right move for many consumers' checking accounts and peace of mind.

1. Discounts are available for bundling

Bundling can lead to bargains. Typically, consumers save between 5% and 25% off the price of coverage by buying multiple policies from the same carrier. In fact, the more policies a person buys, the bigger the discount in most situations.

In our household, for example, we bundle insurance for several homes, several cars, and several businesses -- and doing so saves us hundreds of dollars in combined premium costs compared to purchasing every policy separately from different insurance carriers.

2. It's more convenient to have just one insurer

Bundling coverage can also be a lot more convenient. Since all of my policies come from one company, I only have to deal with one insurer if I have questions about my coverage. I don't have to remember which insurer should be paid premiums or keep track of the contact details of multiple carriers. I just have one place to call and send a check to.

3. Making claims may be easier with only one insurer

It can also be easier to deal with claims when there's only one insurer -- especially if there may be questions about which policy should cover a specific kind of damage.

Say, for example, a tree falls on a vehicle while it is parked in the homeowner's driveway. The auto insurer could potentially cover this because this might fall under the driver's comprehensive coverage. But the homeowner's insurer may also cover this under the structural insurance component of a policy. If there are multiple insurers involved, sorting this kind of issue would become a lot more complicated than if one company just covered everything.

4. Eligibility for umbrella insurance may depend on bundling

Finally, there's another very important reason to bundle insurance coverage: Having multiple insurance policies from the same carrier may be necessary to get umbrella insurance.

Umbrella insurance is secondary insurance. If a claim is made against a policyholder that is in excess of the policy limits, umbrella insurance can pay. For example, if a driver with $200,000 in property damage liability coverage per person was sued by someone for $1 million and was found liable for that much in damages, the auto insurer would pay the first $200,000 in covered losses, and the umbrella insurance would cover the rest up to policy limits.

Typically, if a consumer wants umbrella insurance to cover them in most situations -- such as if they are sued for a substantial sum either because of an accident on their property or in their vehicle -- then they must have their auto and home insurance with the same company offering the umbrella policy.

While there are some limited exceptions to this, when I purchased umbrella coverage many years ago, I had to cancel my existing auto insurance with a different carrier and buy my home, auto, and umbrella policy from the same company. It was worth bundling to be able to get this added protection.

All of these are good reasons to consider bundling insurance coverage -- but consumers should still be sure to shop around and compare options for both bundled and unbundled policies to make sure they get the best policies for their needs.