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One of the easiest and most common ways to save money on insurance is by bundling your home and auto insurance with one company.
Bundling gives you a discount when you get your home and auto insurance policies from the same insurer, but that doesn’t mean it’s always the cheapest option.
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Pros and cons of bundling insurance policies
Bundling discounts vary, but generally range from 5% to 25% for each policy.
Bundling discourages price shopping, making it easier for your insurer to inch up rates until you’re overpaying.
An insurance agent can review your home and auto coverage in one sitting, and you can usually manage them in the same web portal.
It could be cheaper overall to buy from separate companies, particularly if your auto insurance is expensive.
If you’ve made auto insurance claims or gotten tickets, having your policies under one roof lowers the chances your insurer will drop you.
Some "bundled" policies aren't really bundled; some auto insurers may set you up with an affiliated company for your home insurance, so you'd lose the ability to choose your own insurer and the convenience of managing your bills in one place.
Should you bundle home and auto insurance?
Most companies don’t limit bundling to home and auto insurance, offering a break on a number of policies with varying discounts. Larger policies get steeper discounts (as a percentage) in most cases. Since homes are worth more than cars, discounts on homeowners insurance tend to be higher.
» MORE: How much is your car worth?
That means bundling probably saves the most if your home insurance is expensive and your auto insurance is cheap.
But if you have accidents or tickets, poor credit or happen to live in a state with high car insurance rates, auto could easily be the more expensive policy. In this case, the savings from choosing the cheapest car insurance company could dwarf a 20% discount on a home policy.
To decide if you should bundle home and auto insurance, compare quotes for separate policies and bundled policies. If you find separate policies where the combined total is cheaper than the bundled rate with one insurer, there’s no reason to buy them together.
Furthermore, bundling policies makes you more likely to stay with one company. Insurers frequently notch up rates when they renew a policy, but not so much that you’ll get fed up and go elsewhere. This is called price optimization, and over time it could mean you’re paying way more for your policies than you need to.
» MORE: Compare car insurance rates
Tips on better bundling
Compare quotes for bundled policies from several insurers online or with an agent. An independent insurance agent can get prices from multiple companies. Agents who sell exclusively for one company can only offer discounts available with that insurer.
Ask if the insurer uses a third-party insurance company for either policy. Although you may still save money, you lose the convenience because you won’t be dealing with one insurance company anymore.
Regularly shop quotes — both bundled and separate — to compare them to the price of your bundled home and auto policies.