Benefits and Drawbacks of Bundling Insurance
There are hundreds, maybe even thousands, of different insurance companies you can use to cover your life, home, auto, health and other insurance needs. Still, even with all of these options, some people choose to buy multiple insurance policies through just one company, a process called bundling. Before you decide whether to place all or multiple policies with one insurer, consider the following benefits and drawbacks.
- You can get a discount when you bundle. Insurers often incentivize bundling by offering discounts to policyholders who do it. In part, this is because it can help them minimize their risks by gathering even more information about their customers. In addition, insurers treat it as a reward for loyalty.
- When bundling, you may be less inclined to shop around for individual coverage discounts. The bundle you’ve chosen may be more competitively priced than a bundle with another insurer, but it’s possible that by keeping your insurance policies unbundled and shopping for competitive rates with multiple companies, you could find an even lower price.
- Policy payments are much easier to make when bundled. With bundled coverage, you can pay just one bill whenever the premiums are due rather than paying multiple bills on multiple dates. Not only is this more convenient but it also means you’re far less likely to forget a payment and lapse an important insurance policy.
- Bundling may result in less flexibility in coverage options. The insurance company you choose may have perfect options for the design of your auto insurance policy, but may have fewer options for your home insurance policy. That means in some cases, when it comes to policy design, you may be better served by not bundling.
- Relying on a single carrier for all your insurance needs isn’t always a good idea. That carrier could be hit by multiple claims during hurricane or tornado season or after a flood and it could mean that your claims for multiple lines of coverage are delayed.
Deciding whether to bundle your insurance policies is difficult so make sure you work with an agent who understands both the benefits and drawbacks and who’s willing to take time to understand your individual situation to determine which is the best fit.
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