You’d be surprised to know just how many types of insurance policies you can get.
Did you know that there is an alien abduction insurance policy that people in the USA can get so that they can claim if aliens abduct them!? Leaving the aliens in their galaxy, a single person or a family usually has multiple insurance policies, such as home insurance policies, health insurance, and auto insurance policies. Is there a way to make the process and the cluster of insurance policies simpler?
To make managing all the different insurance policies simpler, people choose to bundle them together. So instead of getting 10 different bags to put apples in, you get one large bag and put all the apples in the same bag. Much easier to carry and cheaper to get. But is it always better? Should you bundle your home and auto insurance policies? This article will describe in detail all the uses, benefits, and disadvantages of bundling insurance together.
What is Insurance Bundling?
Going back to the apple analogy, if you need to buy 10 apples, getting ten different bags to keep those apples would be inconvenient and costly. It is much better to get a bigger bag and keep all the apples together. This is an analogy to insurance bundling.
Different people in a single household can have different insurance policies. There could be three different auto insurance policies, a home insurance policy, and much more. Keeping the details of all the different policies from different companies would be tiresome and inefficient.
Insurance bundling allows you to bundle all these insurance policies in one group so that managing and making insurance claims is much easier and faster. There are many benefits of bundling insurance policies together, especially home and auto insurance since these two are ubiquitous. Let’s look at the benefits of grouping insurance policies together.
Benefits of Bundling Home and Auto Insurance
The first and most important benefit of bundling the two insurance together is savings. Since you are getting two insurance policies from a single insurance company, the company will give extra discounts on the overall cost of the insurance. How much? It depends on the company, but you can expect a price cut anywhere between 20% to 25%. Sometimes you can get even more discounts if you bundle more policies together.
You can add more discount options or talk to the insurance company to know other ways of saving more money. While getting individual insurance policies might get you discounts, if you want the lowest rates, then bundling could be the option for you.
Let’s say that you have a home insurance policy from Axa, while your spouse has an auto insurance policy from Churchill, and your car is insured by Admiral. That’s three different companies in a single household. This means managing the insurance policies, from getting the details to making a claim will require three different mobile applications, three different agents (if you choose to have one), and a lot of hassle.
Bundling your insurance policies together means that all the information you need to have can be accessed in one app, or just one insurance agent will help you get everything done. The best thing about it is if you get a car insurance policy for multiple cars, you get even more discounts.
This spreads further to making insurance claims and paying premiums. Instead of making three or four different payments, many companies will give you a unified bill that covers the premium of all your insurance policies. How convenient and time-saving is that! Bundling insurance is also great for people who make insurance claims frequently.
So is everything sugar and rainbows about bundling auto and home insurance policies? Unfortunately, no. There are some major disadvantages of bundling auto insurance policies together. This makes bundling not a great option for many people. Let’s look at the disadvantages of bundling insurance policies.
The first and the most important disadvantage here would be getting locked in with one insurance company. Remember the analogy of getting apples in one bag? The problem here is that if you want a bigger bag, you have to get all the apples from the same shop. No longer you can look for better apples from different shops.
So you might miss out on some great and more affordable auto insurance policies or home insurance policies because you can’t get them from another company. Of course, you can select the insurance company that offers the best rates for all the different insurance policies, but that is rarely the case.
Where one company would give affordable home insurance policies, the other company would be a much better option for getting auto insurance policies. So if you want to save a lot of money and are ready to go through the hassle of managing different insurance policies, then avoid bundling insurance policies.
Another big disadvantage of bundling insurance policies is there is no escape (or at least escaping is difficult) if you want to switch one of the policies. For example, let’s say that you got in a minor road accident and now your auto insurance rates are up. But getting the same car insurance policy from another company will help you save hundreds of pounds.
But if you are in a bundled insurance policy, getting out of it would be difficult and will eventually take away the benefits of bundling if you drop one of your policies. So before you get a bundled insurance policy, it is better to:
- Plan the coverage amount
- Think about all the possible scenarios
- Contact the insurance company and know all the details about bundling, including terms and conditions
- Compare the reduction in cost and consider whether it is worth it
Different insurance companies have different rules and conditions. Make sure that you are aware of all the important ones before getting locked in with one company for all your insurance policies.
Plus, it’s a good ideal to familerise yourself or have access to infomation on insurance laws and regulations here in the UK.