So you just bought a house and are looking to permanently settle down, when a problem arises. Where do you get protection from? At the same time, your child has just turned sixteen and is starting to drive the family car. You need to make a big decision. The insurance company you researched is offering to cut some of the costs if you bundle your home and auto insurance, but what do they have to gain from cutting the costs?
Grouping together insurance plans can be beneficial, but there are drawbacks that every family should be aware of. Bundling Insurance plans often comes down to convenience and pricing. Oftentimes, the same company will provide discounts if plans are bundled together, such as having home insurance together with car insurance. It helps families manage funds, and time especially. Yet, be aware that insurance companies get to take you in for more than one deal. It is beneficial to the insurance agency if there is less incentive for you to look elsewhere—in turn, they get a more stable source of income.
Pros of Bundling
It takes time to find the right provider and the right plan. Not only is it expensive, but it also consumes time—time that could be instead spent with the family. Luckily, most companies allow families to bundle plans into “premiums.” Premiums can save up to 25%.
Another benefit of going through the same company is getting access to all the information about the plan through one source—this also goes for terminating the plan itself. Everything needed is in one filing cabinet.
Clients who bundle will also have to worry less about being dropped if there are too many claims on one insurance plan. If the plan is part of a bundle; the provider is far less likely to drop the client, as that client represents two distinct plans while recognizing them as one client. Dropping them will lose the agency more money.
Cons of Bundling
Much like a car salesperson, the job of an insurance agent is also keeping a potential customer invested and engaged with the product. They’ll show you around the lot and show you different cars only because they want to keep your eyes away from the competition. Bundling is a form of this—it may be a way to narrow a customer’s scope so they cannot see a better deal at another company.
It may save you less money than expected. Do personal research of the plan. Agents may exaggerate the numbers as a way to sell you on a deal that could “save you 20%” if bundled together.
Always do independent research into the company you are interested in. It is a business after all, and there is a product to be sold. Make sure the product is right for you and your family. Do not get blinded by the flashy projections of money that will be possibly saved, check every so often how much was billed (if the deal was accepted), and keep your eyes out for better deals elsewhere. Bundling can help in saving time (or in saving money in many cases), but do not gamble on it. Consider the primary pros and cons of the particular deal being presented.