Does Bundling My Insurance Save Money?

There is quite a bit of advertising circulating that suggests “bundling” your insurance is the key to saving money.  “Bundling” means putting all your insurance – home, auto, and life insurance policies, for example – with the same insurance company.  You can take advantage of bundling, at certain times and places, but it’s not always a good idea.   

Consider how you used to get your cable TV.  You bought a “bundle” of channels as a package, supposedly saving you money.  At our house, we ended up paying for a bunch of channels we didn’t want.  I didn’t care about Bravo, MTV, or the Home Shopping Network, but I was paying for them anyway.  I see bundling as being like the old “Blue Plate Special” at a restaurant:  You get a meat, two sides, dessert, and a drink for one price.  Sometimes, it’s a good idea, but it’s not the right purchase if you only want one side, no dessert, and nothing but water to drink. Sometimes, it’s better to go a la carte.

The Florida insurance market is a mess, and it’s expensive.  There are some opportunities to bundle your insurance, but most of the time, it actually works against you, and for reasons you may find surprising.  Florida insurers tend to be specialists.  Those good at writing home insurance in Florida tend to be terrible at auto insurance, and most auto insurers don’t even write home insurance.  This process even applies to the big national companies.  One of the largest companies, which is all over TV recommending bundling, does well with auto insurance but, in my view, is pretty poor with home insurance, especially in Florida. 

I often place policies for my clients with different companies, according to which company does the best job with a particular type of insurance.  Be careful not to be swayed with supposed “package discounts,” either.  Let’s say you can save 10% on your home insurance by bundling it with your auto.  Well, let me ask you: If that insurer’s home insurance rates are 25% higher than the competitors, that 10% discount isn’t much help, is it?

My advice is to take control of your insurance decisions by talking to your agent about the details of your specific coverage needs. Don’t be swayed by the allure of bundling unless it truly meets your needs. Save the bundling for when you want two sides and a dessert.