How to save money bundling home and auto insurance
Save a bundle by combining your coverage
In the insurance world, "bundling" is the act of purchasing multiple forms of coverage from the same provider. The most common bundle you’ll see is for home and auto insurance.
The two main advantages of bundling are cost and convenience. Most providers offer bundle discounts between 4% and 25%, and some policyholders just find it easier to have one bill, one app and one overall provider to handle their insurance needs.
- Providers encourage policy bundling by offering discounts (typically in the 4% to 25% range).
- Providers want you to bundle because it improves claims handling and data tracking and increases long-term retention.
- Bundling can result in faster claims, easier policy management and enhanced peace of mind, but it isn’t always the right choice.
- If you’re considering bundling, assess your home and auto insurance needs first, and then collect plenty of quotes online.
Why do insurance providers offer bundle discounts?
Insurance bundling has grown in popularity in recent years, but why? Phil Minnes of Phil Minnes Insurance Agency told us: “When I started 15 years ago, bundle discounts were 10% to 15%. Now, they’re sometimes 30% or 40%.”
According to Minnes, insurance providers are increasingly motivated to offer bundles for a few reasons:
- Easier claims handling: In a complicated claims scenario like a rental car break-in, having home and auto coverage from separate providers can result in extra processing time as the pieces are sorted out.
“So much of claims handling is figuring out who owes what,” says Minnes. “The fewer carriers you have involved in a claim, the better experience you’re going to have as a customer.”
- Data tracking: It probably comes as no surprise that insurance providers tend to track your data just like everyone else. “Providers are willing to trade a little premium for a little more of that info,” Minnes said.
- Customer loyalty: It’s easier to make customers happy “if we can handle all the pieces,” Minnes told us. That, in turn, can lead to increased brand loyalty and higher retention rates year after year.
Pros and cons of bundling home and auto insurance
Despite the simple and appealing value proposition (buy more, save 10%!), bundling doesn’t always make sense — there are some upsides and downsides to consider.
What are the advantages of bundling insurance?
Bundling your coverage can come with many advantages, including but not limited to:
- You could save significantly: The primary benefit of bundling is the cost savings. Most providers offer a bundle discount between 4% and 25% (but they can go as high as 40%).
- It simplifies billing and claims: Bundling with a single provider reduces the number of bills and apps you have to manage. Plus, bundling can expedite claims processing, since you won’t have multiple providers playing tug of war over who pays for what.
- Your provider may waive your deductibles: In some cases, if you file a claim for both home and auto insurance at once, your provider may waive your deductible for one of the policies.
- It provides peace of mind: For some customers, having just one provider to go to for questions and claims handling can mean one less thing to worry about.
Beware the “loyalty tax” — some agencies may rip you off if they think you’re not likely to look elsewhere for a better rate.
What are the disadvantages of bundling insurance?
Key advantages aside, there are also some potential drawbacks of bundling to consider:
- Having separate policies may still be cheaper: Even with a discount, bundling may not be your cheapest option. For example, if Provider A charges $1,500 for home insurance and $2,500 for auto, a 10% bundle discount would bring your bundle total down to $3,600. But if Provider B offered auto for just $1,800, purchasing separate policies with A and B could save you $300 more than the bundle price.
- The advertised savings can be misleading: Sometimes providers advertise a bundle discount “up to 25%,” but that 25% discount only applies to home or auto, not the combined price of both.
In the above example, if Provider A’s “10% bundle discount” only applied to home insurance and not the whole bundle, your true savings would only be $150, not $400. That represents only a 3.75% discount off the total.
- You may lose out on coverage and benefits: Provider A may have a weak reputation for auto insurance, while Provider B offers industry-leading coverage, perks and benefits for its auto policyholders. Therefore, purchasing separate policies lets you get the best of both worlds.
- You may be charged a “loyalty tax”: Some insurance companies have been caught overcharging loyal customers simply because they were perceived as less likely to shop around for a better deal. It’s unclear which customers are hit with the hidden “loyalty tax” and when, but bundling may increase the risk you’ll be on the list.
You may be able to avoid the “loyalty tax” by proving to your provider you’re not afraid to shop around — this is yet another reason to bring a competitor’s offer to the table at least once a year.
How to bundle home and auto insurance
Bundling home and auto insurance is usually pretty simple because providers are motivated to make it easy. Most companies, like Progressive and Allstate, offer bundle quotes on their websites. You can also get quotes for home and auto insurance separately, and most online quote wizards let you add the other and bundle later.
If you already have home or auto coverage with a certain provider, the fastest way to get a price on a bundle may be to call and speak with an agent. Getting on the phone also gives you a chance to review your existing coverage, hunt for discounts and reassess how much coverage you really need.
Before you commit to purchasing the bundle on the phone, however, it’s best to just record your current provider’s offer and see if you can beat it. Even if you’re not ready to switch providers, there’s an advantage to shopping around.
How to save the most by bundling insurance
To get the most savings, determine your insurance needs first — the easiest way to save on insurance is to only buy what you need. Assessing your needs and coming up with a “shopping list” will save you money and make collecting quotes go much faster. A few more tips:
- Maximize discounts from your current provider: In addition to the bundle discount, ask your current provider what discounts you’d qualify for with home and with auto insurance individually. You may also find that simply updating your information on file (such as your marital status) can lead to discounts.
- Get at least five more quotes: Once you have your shopping list handy, it can take as little as five minutes to get a bundle quote online. Therefore, if you have the time, it’s worth it to get as many quotes as you can on home insurance, auto insurance and bundles of both from various top-rated companies.
- Bring a competitor’s offer back to your current provider: You may just want the best possible price without having to switch providers. If so, one tactic that sometimes works is to bring the lowest offer you can find back to your current provider and ask it to match it. At the very least, your efforts may insulate you from the “loyalty tax.”
» SAVE MORE: How to get cheap car insurance
Which companies offer the best insurance bundles?
Bundling discounts are widely available, but which insurance companies offer the best bundle discounts? Check out our table to compare your options.
Bundling discounts by insurance company
|Geico||✔||Discount varies by policy|
|Erie||✔||Up to 20%|
|State Farm||✔||Up to $1,127 for new customers who switch|
|Progressive||✔||Up to 4% on auto|
|USAA||✔||Up to 10%|
|Allstate||✔||Up to 25%|
|AARP/The Hartford||✔||Up to 5% (auto); 20% (home)|
|Farmers||✔||Average of 20%|
|Liberty Mutual||✔||Average of $950 for new customers who switch|
|Nationwide||✔||Up to 20%|
|AAA||✔||Discount varies by policy|
|Travelers||✔||Up to 10% on auto|
|American Family Insurance||✔||Up to 23%|
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