Bundling. It's a funny sounding word, but it could end up saving you a good amount of money on your car insurance. Companies frequently advertise the discounts they offer when you 'bundle' all of your insurance policies under their name. Is it actually worth it though? Should you move all of your insurances like homeowners, renters, condo, motorcycle and life under one company? We took a deep dive into these questions, and closely examined auto insurance bundling.
What Can You Bundle Auto Insurance With?
To learn more about the topic, we studied four of the nation's largest property and casualty insurers, State Farm, GEICO, Allstate and Progressive. They have, more or less, the same basic principle for what you can bundle, with a few minor differences.
At State Farm, for example, you can bundle life, health, homeowners, condo, renters and even farm insurance with your auto insurance policy. In contrast, GEICO only allows you to bundle home, condo renters and mobile homes with your auto policy. Progressive also allows home, renters and condo, with the addition of secondary vehicles such as motorcycles, boats, snowmobiles etc. If you are not a part of either of those companies, you can do a quick online search or call your agent to see what policies can be bundled.
How Much Are You Saving When You Bundle?
The answer to that depends on what you are bundling, with whom, and in some cases when you are choosing to do it. Companies are actually quite different from one another when it comes to their policies.
At State Farm and Allstate, the biggest discounts come from combining two expensive policies. We examined auto policies in Alabama and found that when bundled with a homeowners policy, you can get a 15% discount. By contrast, if you combined the same auto policies with renters insurance coverage, which tends to be relatively inexpensive, we found discounts of just 10%.
GEICO does not discern between what type of policy being bundled and gives a flat 3% discount.
Things are slightly trickier when it comes to Progressive. Not only does your discount depend on what you are bundling, but also on how many things you're bundling, and when you are bundling them. Take a Rhode Island driver, for example. If they had a homeowners, motorcycle and an umbrella policy, and all of those were bought around the time they opened an auto policy with Progressive, they would receive a 17% discount. If on the other hand they bought only a homeowners policy, after renewing their auto policy, they would only get a 5% discount. If this all sounds confusing, and we go into more detail here.
Should You Bundle?
To bundle or not to bundle? As with all things insurance, the answer to that question is: shop around for the best price. The first thing to do is assess what you already have insured and what you may need to insure in the future. Next, you should search through all the insurance companies available to you in your area and get quotes. Don't assume bundling will be cheaper.
We found State Farm offers annual premiums of $1,000 for auto and $3,000 for home, in one sample location. With the bundle discount, we got 15% knocked off both policies, meaning you'd end up paying $850 and $2,550 for a total of $3,400 per year. That is a great discount, but we found better deals by mixing polices from different companies. A competing company in the same area offers a homeowners policy for just $2,000 a year. Altogether, this would result in paying just $3,000 per year -- $400 less than if you chose to bundle.
Remember, bundling makes sense when it gets you the best deal. Your company may advertise it heavily, but just remember to always shop around and not commit to anything until you are assured that you are lowering your premiums.