{"id":43974,"date":"2019-07-23T18:29:29","date_gmt":"2019-07-23T22:29:29","guid":{"rendered":"https:\/\/thelehighacresgazette.com\/news\/?p=43974"},"modified":"2019-07-23T18:29:40","modified_gmt":"2019-07-23T22:29:40","slug":"pros-and-cons-of-bundling-insurance","status":"publish","type":"post","link":"https:\/\/thelehighacresgazette.com\/news\/2019\/07\/pros-and-cons-of-bundling-insurance\/","title":{"rendered":"Pros and Cons of Bundling Insurance"},"content":{"rendered":"\n
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By Taylor Kovar<\/p>\n\n\n\n

Shopping for insurance is a big deal. If you feel like it\u2019s\na small deal, you need to make a bigger deal out of it.<\/p>\n\n\n\n

Why does it matter so much? Mostly, it\u2019s because signing up\nfor a giant monthly bill better come with some serious benefits. If you go with\nthe most generic plan, you\u2019ll still pay a good sum of money and might not get\nthe actual coverage you need when the going gets tough.<\/p>\n\n\n\n

It honestly shouldn\u2019t cause as much strife as it does, but\nthe inner workings of insurance make it a complex puzzle. Quality policies\noperate on the assumption that you aren\u2019t likely to need those protections. The\nmarket relies entirely on covered individuals not using their coverage. So when\nyou present yourself as a customer who might file claims regularly, it becomes\na lot harder to get a truly comprehensive policy.<\/p>\n\n\n\n

Insurance companies look for good reasons to insure you, and\none of the best ways to entice them is buying multiple plans. The more you buy,\nthe better the insurer\u2019s odds of taking more from you than they give out. It\ndoesn\u2019t sound fair, and it isn\u2019t meant to be. When you need the help, that\u2019s\nwhen the scales hopefully tip in your favor.<\/p>\n\n\n\n

Of course, getting affordable, quality coverage isn\u2019t as\neasy as finding a two-for-one deal. Depending on what you need and what kind of\nlife you lead, a bundled policy has numerous pros and cons. While it\u2019s\nvirtually impossible to find coverage that\u2019s absolutely flawless, shopping\naround and researching can help you find something suited for your situation.<\/p>\n\n\n\n

I\u2019m going to keep this narrowed to home and auto insurance,\ngoing over what you can expect and what you should try to get. Most types of\ninsurance can be bundled, but we\u2019ll keep it to the big ones for now. After\nreading you might decide a package deal doesn\u2019t make sense for you, or it might\njust be the thing that saves you hundreds of dollars each month.<\/p>\n\n\n\n

The Pros<\/p>\n\n\n\n

Coverage you need at an affordable price? There\u2019s a lot to\nlike about that, including some conveniences you might not have thought about.\nFirst, the most obvious\u2026<\/p>\n\n\n\n

1. Discounts<\/p>\n\n\n\n

You can find all sorts of discounts from insurers – safe\ndriver, first-time homebuyer, good student – but few compare to what you save\nwhen you put multiple policies into one package. The reason being that you\u2019re\npaying more than one monthly premium, and that\u2019s the bread and butter for State\nFarm, Geico, Progressive and everyone else.<\/p>\n\n\n\n

Bundling home and auto can save you as much as 25% on your\npremiums and usually no less than 7%. Savings depend largely on where you live:\nMidwest bundlers tend to see the biggest savings, often over 20%, while people\nin Florida, New York and Hawaii get closer to a 10% premium discount. Wherever\nyou are, it all still depends on the value of the assets in the policies and\nthe risks you present.<\/p>\n\n\n\n

Insurers want to handle all your coverage. They want you to\npay multiple premiums, and they\u2019ve shown a great willingness to discount\npolicies in order to win your business.<\/p>\n\n\n\n

2. One Point Person<\/p>\n\n\n\n

Insurance can feel like an unfeeling industry, and it\noftentimes is. Because of that, when you work with a friendly agent who understands\nyour personal situation, the process becomes much more amicable and more likely\nto work to your advantage.<\/p>\n\n\n\n

Even while everything becomes more automated and app drive,\na human being with your best interest in mind still makes a big difference.\nFiling claims and keeping your premiums in check often comes down to a\nprofessional going to bat for you. Having multiple coverages with one agent\nmakes you a more valuable client and also means you spend more time in contact\nwith that person. While that doesn\u2019t guarantee you\u2019ll become best friends,\nyou\u2019ll be more than just a name in the clientele file.<\/p>\n\n\n\n

While insurance company CEOs are more likely to focus on the\nbottom line, the agents put in work to keep clients happy so they don\u2019t take\ntheir business elsewhere. If you have a decent relationship with your agent,\nthere\u2019s a good chance they\u2019ll be on the lookout for ways you can save. And if\nthat person looks after multiple policies, they\u2019ll have more chances to put\nmoney back in your pocket.<\/p>\n\n\n\n

3. Lower Probability of Dropped Coverage<\/p>\n\n\n\n

If it hasn\u2019t happened to you before, insurance companies\nwill absolutely drop a customer who becomes too much trouble. They won\u2019t do it\nafter your first fender bender, but once you\u2019ve got a handful of claims and\nit\u2019s clear you have liability issues, your agent will probably start looking\nfor the door.<\/p>\n\n\n\n

That changes when you have two policies intertwined. Even as\nyou present a headache for the auto division, the premiums you pay on property\ninsurance keep you from becoming expendable. That bundled package might just\nmake you valuable enough for your provider to overlook the other claims.<\/p>\n\n\n\n

Getting dropped by an insurer causes all sorts of problems,\nfrom out-of-pocket expenses to finding another agent who will offer an\naffordable policy. While you shouldn\u2019t assume dual coverage will wipe away your\nproblems, it does make you more appealing to your provider.<\/p>\n\n\n\n

4. Combined Deductible<\/p>\n\n\n\n

Sometimes, sometimes, insurers will combine the deductible\nfor your home and auto insurance and get you a smaller total than if you had\ntwo separate amounts. In a year when you file multiple home and auto claims, a\ncombined deductible can save you thousands of dollars.<\/p>\n\n\n\n

You have to ask your agent about this one; don\u2019t assume your\nbundle will automatically result in a deductible reduction. If it does, give\nyour agent a hug and yourself a pat on the back.<\/p>\n\n\n\n

The Cons<\/p>\n\n\n\n

I think the pros make a strong argument for insurance\nbundling, but I\u2019m not about to let this become a one-sided argument.<\/p>\n\n\n\n

1. The \u201cToo Good To Be True\u201d Effect<\/p>\n\n\n\n

We mainly look to bundle for premium savings. That\u2019s why I\nmade discounts the first item on the list of positives above. Unfortunately,\nthose alluring savings often come back to bite when you have to put your\ncoverage to use.<\/p>\n\n\n\n

Say you have quality coverage for auto and you\u2019re looking to\nadd home. You might assume the second policy will be comprehensive and thorough\njust like what you already have, but that isn\u2019t a given. If the bundle ends up\nbeing far cheaper than you expected, there\u2019s a good chance the coverage you\u2019re\nadding is barebones and inadequate.<\/p>\n\n\n\n

For whatever reason, people pay more attention to the\ndetails when buying separate policies and let more stuff slide when getting a\npackage deal. Agents usually know this and will try to package some of their\ncheaper, flimsier policies when you go to bundle, hoping you\u2019ll opt for the\nsale and ignore the substance.<\/p>\n\n\n\n

2. Disappearing Benefits<\/p>\n\n\n\n

Ever had a price adjustment within one of your insurance\npolicies? Of course you have! Whether it\u2019s going up or down, premiums rarely\nstay put for too long. This is especially true when you get an awesome\nintroductory rate on an insurance package.<\/p>\n\n\n\n

Sometimes it happens over the course of five years, other\ntimes you\u2019ll notice a big jump in just six months. You may have been told about\nthe creeping premium rates and were initially OK with it, or it might have been\nnoted in the finest of fine print and you\u2019re caught completely off guard. In\nany case, the price on one or both of your policies could very well sneak up\nover time.<\/p>\n\n\n\n

There are two main reasons to expect these incremental\nincreases. First off, it might just be the company\u2019s way of breaking even on\nwhatever savings they offer you. It could be that you get a really awesome\nprice break for the first couple years, but then for the next couple years you\nsee those savings dissipate. In the end you\u2019re paying a pretty average rate and\nyou just have fond memories of the time when your insurance was really, really\naffordable.<\/p>\n\n\n\n

The second reason you might see a slow upward trickle on\npremiums is a little more devious. Because you have two policies and the burden\nof finding coverage isn\u2019t weighing on you, insurers know you\u2019re a little less\nlikely to go shopping for a new policy. As the premium hikes come in, there\u2019s\nan expectation you\u2019ll just grin and bear it and, unfortunately, that\u2019s\ngenerally how things play out. Some of you may be reading this and thinking\nabout how you\u2019ve just been dealing with expensive monthly premiums for decades\nbecause the thought of finding a new provider exhausts you.<\/p>\n\n\n\n

While good agents will try to find discounts in order to\nkeep your business, many of them will try to raise prices when they feel\nconfident you won\u2019t cut ties. When you\u2019ve got multiple policies with one\ncompany, they\u2019ll start feeling a little more confident and might see about\nsqueezing a few more dollars out of you each month.<\/p>\n\n\n\n

3. \u201cNew Policy, Who Dis?\u201d<\/p>\n\n\n\n

If you work with a reputable insurer and an agent you know,\nthis probably won\u2019t be a big deal. If you go with cut-rate insurance through a\nquestionable company, it\u2019s possible the coverage you add to your bundle will be\noutsourced to an affiliate. This could be a non-issue; it could also be a\ndisaster.<\/p>\n\n\n\n

With an affiliate policy, the coverage still falls under the\nname of your primary insurer but the details get sorted out elsewhere. This\nmeans when you have to handle a claim or rework any specifics, it won\u2019t be as\neasy as you\u2019d like. Instead of calling the guy you\u2019ve known for years and have a\nrelationship with, you\u2019re dialing an 800 number and spending an hour on hold.\nBy all definitions, that\u2019s pretty annoying.<\/p>\n\n\n\n

You also might end up with a policy that doesn\u2019t cover as\nmuch as you expected. You\u2019ll feel lied to and cheated, but the paperwork will\nbe on the side of the insurer and you won\u2019t have a leg to stand on. For the\nmost part, the affiliate insurer problem is just a nuisance, but it can end up\ncosting you money if you don\u2019t have the coverage you thought you did. That\u2019s\nwhy, per Pro #2, it\u2019s really nice if you have all your policies handled by one\ntrustworthy agent.<\/p>\n\n\n\n

What To Do?<\/p>\n\n\n\n

As you can see, all the pros and cons exist in a sort of\ngrey area. Depending on where you live and what you\u2019re insuring, the pluses and\nminuses of a bundled package will vary. Your neighbor could combine home and\nauto and save $500 a month, and you could try to do the same thing and end up\nwith worse coverage and $30 savings. A lot of it depends on the provider and\nhow they assess your value and risk.<\/p>\n\n\n\n

In general, if you don\u2019t have lots of outstanding claims or\na property that catches on fire every single year, bundling could provide great\nsavings. We all hope to pay for insurance and never use it, and if that\u2019s how\nthings play out you should get affordable premiums along the way. Good agents\nwill tell you truthfully about what you stand to save, so do what you can to\nfind a person you trust. That will make all the difference when figuring out if\nbundling is the right move or not.<\/p>\n\n\n\n

A final note about adding life insurance to the mix. More\noften than not, I\u2019d say keep that one separate. I think 20-year term life\ninsurance purchased every 5-10 years makes the most sense, as it\u2019s easy to get\nand offers the coverage you actually need. If you throw it into a bundled deal,\nyou start playing with fire and this is an area where you definitely don\u2019t want\nto get burned.<\/p>\n\n\n\n

With home and auto, do all the bundling and unbundling you\nwant. Remember that the relationship between you and your insurer is mutually\nbeneficial. It\u2019s not like a bread salesman who only has so much of a product to\noffer. Insurance companies get by on volume, so your business is very much\nneeded. If you want two forms of coverage, your agent will likely do as much as\nhe or she can to make it happen. As long as you don\u2019t lose sight of your value,\nthe savings are out there for the taking.<\/p>\n","protected":false},"excerpt":{"rendered":"

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