Bundling Without the Hype: How to Evaluate Your Total Risk Plan

Evaluating Insurance Bundling in Minnesota

Bundling auto and home insurance is often promoted, but is it always the best choice? Understanding the pros, cons, and alternatives helps you make informed decisions.

What Is Bundling?

Bundling means purchasing multiple insurance policies (typically auto and home) from the same insurer, often receiving a discount for doing so.

Typical Bundling Discounts

• 10-25% discount: Common range for multi-policy discounts
• Varies by insurer: Some offer more, some less
• May require both: Usually need both auto and home to qualify
• Other policies: May include umbrella, life, etc.

Benefits of Bundling

1. Cost Savings

• Multi-policy discount: Lower overall premiums
• Convenience: One insurer, one bill, one point of contact
• Simplified management: Easier to track and manage

2. Potential Benefits

• Better service: Some insurers prioritize bundled customers
• Easier claims: One insurer for multiple claims
• Relationship building: Stronger relationship with insurer

When Bundling May Not Be Best

1. One Policy Is Significantly More Expensive

The Problem:

• Auto might be expensive: One insurer's auto rates are high
• Home might be expensive: Home rates are uncompetitive
• Discount doesn't offset: Savings don't make up for higher base rates

Example:

• Insurer A: Auto $1,200, Home $1,000, Bundle discount 20% = $1,760 total
• Insurer B: Auto $800, Home $900 = $1,700 total (separate, no bundle)
• Better to go separate: Even without bundle discount, separate is cheaper

2. Coverage Differences

The Problem:

• Different coverage quality: One policy has better coverage than the other
• Limitations: One insurer has restrictions the other doesn't
• Inconsistent terms: Different deductibles, limits, etc.

3. Service Quality Varies

The Problem:

• Great auto service, poor home service: Or vice versa
• Different claims handling: Inconsistent experience
• Agent expertise: May be strong in one area, weak in another

4. Market Changes

The Problem:

• Rates change differently: Auto and home rates don't move together
• One becomes uncompetitive: Over time, one policy may become expensive
• Locked in: Harder to shop one policy without affecting the other

How to Evaluate Bundling

Step 1: Get Separate Quotes

Get quotes for:

• Auto only from multiple insurers
• Home only from multiple insurers
• Bundled from insurers that offer bundling

Step 2: Compare Total Costs

Compare:

• Bundled total: Auto + Home - bundle discount
• Best separate total: Best auto + best home (may be different insurers)
• Difference: Is bundling actually cheaper?

Step 3: Evaluate Coverage

Compare:

• Coverage quality: Are coverages equivalent?
• Limits and deductibles: Do they meet your needs?
• Exclusions: Any important differences?

Step 4: Consider Service

Evaluate:

• Claims handling: How do they handle claims?
• Customer service: Responsiveness and quality
• Agent expertise: Knowledge in both areas

Step 5: Think Long-Term

Consider:

• Rate stability: How do rates change over time?
• Flexibility: Can you easily adjust one policy?
• Market changes: What if one becomes uncompetitive?

Real-World Example

Scenario: Twin Cities Homeowner

Option 1: Bundled

• Insurer A: Auto $1,100, Home $1,200
• Bundle discount 20%: $440 savings
• Total: $1,860/year

Option 2: Separate (Best of Each)

• Insurer B: Auto $900 (best auto rate)
• Insurer C: Home $950 (best home rate)
• Total: $1,850/year

Result: Separate is actually $10 cheaper, plus you get the best coverage in each area.

Questions to Ask

About Bundling

• What's the multi-policy discount?
• Do I need both policies to get the discount?
• What happens if I cancel one policy?
• Are there other ways to save?

About Alternatives

• What if I get auto from you and home elsewhere?
• Can I get quotes for both bundled and separate?
• How do your rates compare to competitors?
• What's the total cost difference?

The Bottom Line

Bundling can save money and provide convenience, but it's not always the best choice. Sometimes separate policies from different insurers provide better coverage, service, or total cost. The key is to compare total costs, coverage quality, and service—not just assume bundling is always better.

If you're in Minnesota and want to evaluate whether bundling makes sense for your situation, consider speaking with a licensed insurance professional who can help you compare options and find the best total solution for your needs.