Welcome to the 2-Minute Money Manager, a short video feature answering money questions submitted by readers and viewers.
Today’s question is about insurance; specifically, whether buying various types of policies from the same company will save you money.
Watch the following video, and you’ll pick up some valuable info. Or, if you prefer, scroll down to read the full transcript and find out what I said. You can also learn how to send in a question of your own below.
For more information on this topic, check out “The 5 Golden Rules of Saving on Insurance” and “8 Foolproof Ways to Slash the Cost of Homeowners Insurance.” You can also go to the search at the top of this page, put in the word “insurance” and find plenty of information on just about everything relating to this topic.
Got a question of your own to ask? Scroll down past the transcript.
Don’t want to watch? Here’s what I said in the video
Hello, everyone, and welcome to the 2-Minute Money Manager. I’m your host, Stacy Johnson, and this two-minute answer is brought to you by MoneyTalksNews.com, serving up the best in personal finance news and advice since way back in 1991.
Let’s get right to our question. It comes to us from Jill:
I’ve always heard it’s better to bundle your insurance for discounts, having both policies with the same agency. Do we really save a lot by bundling, or is OK to have different insurance for each one?
Good question, Jill. Here are three things to know.
Thing No. 1: What it means to ‘bundle’ insurance
As Jill said, bundling means buying different types of insurance policies from the same company. For example, you might have your car and home insurance with the same company. You might also have motorcycle, boat and RV coverage with the same company. You can sometimes even bundle life insurance.
The idea is that by giving one company all your insurance business, they’re going to cut you some slack and give you a discount.
Thing No. 2: Bundling pros
One advantage to bundling I just mentioned: You might save some money. According to , the average savings on bundling policies in the U.S. is around 16 percent. However, that’s going to differ a lot by state. In other words, in some states you’ll save more than you will in others. Still, the potential to save money is certainly one of the pros.
Another advantage to bundling: It’s simpler. You’ve only got one company to deal with and perhaps only one check to cut if your policies all come due at the same time.
You may also have less paperwork to deal with.
Thing No. 3: Bundling cons
The primary drawback of bundling is that you might not get the best possible deal. You’ve got to shop your policies individually and find out what will get you the best deal, both initially and on an ongoing basis.
Here’s something personal about you that both I and insurance companies know: You hate shopping for insurance. Since insurance companies know this about you, it’s possible — even likely — that after you make your initial wonderful bundle deal, they’re going to begin gradually raising your rates every year. They’re well aware you don’t want to shop prices, especially now that you’ve got everything under the same roof.
Bottom line? If you’re going to save a bundle, bundle away. But bundled or not, shop those policies individually at least every couple of years to make sure those savings last.
Hope that answers your question, Jill. If you want more info, go to MoneyTalksNews.com and do a search for “insurance.”
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I founded Localpizzadeliverywalledlakemi.info in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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