Is it always a good idea to bundle your insurance policies?

Bundling products and services is a marketing technique designed to appeal to a consumer’s perception of value and convenience. To see the concept in action, look no further than your favorite fast food restaurant. If you choose to turn your sandwich order into a “meal deal” by adding a drink and fries, you’ve decided to bundle. Since you were already feeling both hungry and thirsty, bundling menu items is a no-brainer. The total cost of your meal is now less than if you had ordered the sandwich, fries and drink a la carte.

Scale bundling up to purchases such as home and auto insurance, however, and it begins to require closer examination.

If you’re like most people, your first experience with insurance was when you purchased your first car. At the time, you probably shopped around for the lowest rate. As your obligations and number of assets grew, you may have added homeowners or rental insurance, life insurance, travel insurance and perhaps insurance for a boat, motorcycle or recreational vehicle.

Should you keep these policies separate, underwritten by different insurance companies, or will bundling them with one insurer save you money?

The benefits of bundling your insurance

The primary benefit of combining your insurance policies is potential savings. Many insurance providers will discount an individual policy (or multiple policies) if you choose to bundle. The amount you can save by bundling policies varies, so compare the total cost of your current individual policies, then seek out quotes for a comprehensive policy to replace these.

Bundling your policies offers the added benefit of lightening your paperwork load. You’ll only have one bill to pay rather than several, and if a single event — for example, a storm that damages both your home and vehicle — is covered by different policies, a single insurer will handle your claim.

The potential drawbacks of bundling

You may have received a quote for a combined home and auto policy that offers a good discount over what you pay separately. But what happens when your premium ticks up at renewal time?

You might just take the path of least resistance and pay the higher premium, rationalizing that price increases are to be expected. If you discover a better rate for your auto or home insurance somewhere else, canceling that part of your plan will unbundle your policy, and you will lose the discount that brought you to that insurer in the first place. On the other hand, if you do decide to maintain separate policies, you’ll still have the flexibility to respond to price increases by shopping around.

The best way to shop for a comprehensive policy

If you’re interested in bundling your insurance, start by shopping for your most complicated policy. For most people, homeowners insurance is the most costly and the most complex insurance policy they’ll purchase. Get several quotes and narrow your list down to two or three prospects, then ask about bundling other insurance products. Be sure to compare apples to apples by looking at policies that have the same coverage and deductibles.

Don’t overlook service when shopping for insurance. You’ll want to work with an insurance agent who will evaluate your specific needs and take the time to ensure you understand the provisions of your policy. While you hope you never need to use your insurance, having a knowledgeable and professional representative when it’s time to file a claim goes a long way toward relieving the stress of an accident or other mishap.

Whether you purchase your insurance from one company or several, it’s important to review your policies annually. Underwriting standards may have changed, which will affect rates. Moreover, changes in your own life circumstances — marriage, the birth of a child, your credit score, etc. — will affect your insurance needs.

City Credit Union offers a range of insurance products with competitive rates and reliable coverage. Contact a City CU insurance representative to discuss your insurance needs and available discounts. City CU serves eight counties in North Texas — and probably the one where you live or work.