Bundling Your Insurance May Be Costing You Money

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Beware of the basic bundle logic — it might cost you money.

Important points

  • Buyers are less and less satisfied with the cost of insurance.
  • Recent price increases in car insurance in particular are encouraging buyers to unbundle policies.
  • You may be able to save money by calling your insurer to ask for a discount, or shopping around for both individual and bundled rates.

Many people bundle insurance for discounts. That’s kind of the point. Auto and homeowners insurance mesh like peanut butter and jelly. However, some bundlers are rethinking this step. Here’s why.

Expensive car insurance

The price of car insurance has gone up. It’s gotten to the point where bundling might cost you money. Homeowners who bundle home and auto insurance prices are increasingly dissatisfied, according to the JD Power 2022 US Home Insurance Study.

Experienced buyers notice when the price of car insurance costs more than bundle discounts. They are looking for alternatives — even if that means splitting their insurers.

Limited customization

Bundle insurance can force you to pay for what you don’t need. Some bundles require bundlers to pay for the entire pizza when bundlers only need a single slice. For example, insurers may force customers to pay for collision coverage on an old car.

What other options are there?

Insurers compete for your attention. The best cheap car insurance companies give some of the best deals in the industry to cost-conscious drivers. And the best cheap homeowners insurance companies offer similar discounts to homeowners.

Many tech-savvy clients are turning to Insurtech companies like Hippo and Lemonade. In fact, 1 in 3 homeowners who don’t have Lemonade insurance but are aware of the brand say they would buy a policy if Lemonade were available in their area, according to the JD Power study.

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When it comes to finding the best insurance, buyers have options. They should not feel tied to their current insurer just because they get discounts on bundles. It may be cheaper to shop around for lower premiums.

Do you need to unbundle?

It depends. My brother and I have a multi-policy discount through Geico. But if Geico raises our auto insurance premiums, we’ll shop around for lower prices, even if it means unbundling and losing our multipolicy rates.

While affordable insurance is essential, good car insurance pays for itself. Rather than focusing on price alone, it can be more cost-effective to focus on how much value you’re getting from your car insurance policy. The best car insurance companies are not always the cheapest.

When it comes to car insurance, the best and easiest way to save may be to contact your insurer directly and ask for a discount. Insurers offer discounts on everything from a decent grade point average to a functional alarm system on a vehicle.

When taking out new home or car insurance policies, you should have the following information available:

  • The cost of your car insurance
  • The cost of your home insurance
  • The total cost of your insurance bundle

The average savings for bundling home and auto insurance is 14%, according to data from Forbes. If you can get a better discount without bundling, shop around. You could end up saving hundreds a year in premium costs.

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