When shopping for car insurance, it is common for the insurance companies to ask if you want to purchase another type of insurance from them – such as home, property, or life insurance. This is wise marketing on the part of the car insurance companies because they can build up their businesses by maximizing sales with each customer but without having to spread their resources too thin.
There are some obvious advantages to bundling your car insurance with other insurance policies. It is much more convenient to use one insurance company for all or most of your needs. Instead of having to write tens of checks every year, you can just send out your payments to the one insurance company. If anything does go wrong, then you will be able to use the same agent for the entire ordeal. In some cases, this would be especially helpful – like if your garage is broken into and all your tools and cars are stolen. If you had car insurance and property insurance from the same company, you would only be making one phone call.
The main reason that people bundle their car insurance with other insurance policies is because it can save a lot of money. The policies themselves can be much cheaper, saving the policyholder several hundreds of dollars yearly on car insurance. There are also other savings with bundled car insurance as well. For example, if many assets are damaged in one situation, some insurers only require the policyholder to pay the highest deductable on one policy. For example, a tornado strikes and takes out your car and home. If your car insurance had a $500 deductable and your home insurance had a $1000 deductable, you would only pay $1000, not $1500.
However, bundling is not always the best option, financially nor coverage wise, especially for car insurance. The car insurance business is already so very competitive that it is difficult for the companies which sell multiple types of insurance to offer better deals. Since the savings for bundling car insurance are so low (if any), it doesn’t make sense to buy car insurance from your other insurance provider.
In almost all cases, you are limiting your car insurance options if you choose to bundle with other policies. This can leave you paying, albeit a discounted price, for a policy which isn’t what you really need. With auto-only insurance companies, you will be offered numerous policy options and may also be offered discounts which aren’t available with bundling, like ticket forgiveness or claim-free discounts.
Before you decide to bundle your car insurance, make sure that you do some shopping first. You can always add the car insurance to your other insurance policy later, so there is no urgency to decide. The most important thing with bundling car insurance is to make sure that you are getting everything you need but without paying more for extras which you really don’t need.