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The Benefits of Bundling Your Insurance Coverage

Many American drivers never consider enrolling in insurance coverage that works for modern life, they tend to choose the insurance company their parents use. It's not uncommon to see someone change their insurance provider simply to save money. While saving money is a great idea, it doesn't change the fact that many people make bad decisions when choosing their insurance provider. Some first-time home buyers also make bad choices regarding insurance. Most homeowners use the insurance company recommended by their real estate agent or title company. The idea of selecting an insurance provider because they were recommended or because someone else chooses them also extends to how people select their life insurance policies.

The decision to purchase insurance is usually based on two factors, one being convenience and the other being the cost of insurance. Because of this, many people use more than one insurance company and make several insurance payments each month. Essentially, what may have seemed like a good money-saving strategy is not. By not bundling the insurance policies, you are missing out on a significant money-saving opportunity.

The Benefits of Bundling Your Insurance Policies

Large insurance companies offer competitively low prices on their insurance packages to attract people who want a three-in-one insurance policy. These companies create a pricing structure that saves you money as compared to purchasing the policies individually at different insurance carriers. Bundling allows customers to save money because these companies offer great deals to people who purchase the three major types of insurance with them.

A lot of these companies also offer "multiline discounts". Multiline discounts allow you to get a cheaper rate when you purchase insurance for house and vehicles rather than purchasing the insurance separately at a different company. When you add another vehicle or sign up for life insurance coverage, you will save even more.

How Much Money Can You Save?

The exact amount of money you will save depends on several factors that include: where you get your insurance policy, the value of your home, the value of your car, and driving habits. The average family spends between $3,000 and $5,000 annually on insurance.

The Catch: Insurance Companies Also Benefit from Bundles

Insurance companies profit from the economies of scale and justify the discounted bundles by hoping that they see an increase in insurance premiums. When people purchase all three policies in a package with one company, the company get more money to make their investments. Because the company can invest more money, they can afford to charge less. You may have noticed that multi-line companies are not price-competitive as compared to one-line policies.

Insurance companies encourage their sales teams to focus on life insurance sales. They believe that if an individual has life insurance coverage, they are less likely to change their insurance carriers due to the difficulty involved in getting a life insurance policy. Getting a life insurance policy can involve medical exams and meeting certain age and health criteria.

Large insurance companies want to keep their existing companies because processing new customers is expensive. Insurance companies will often give discounts to customers to keep customers satisfied. These same companies also prefer customers who have multiple insurance policies and keep them more several years. Getting multiple insurance policies from the same household helps to diversify a company's risk.

Bundling all of your insurance policies with the same company will save you more money than purchasing the policies on their own with different companies. You also note that when one insurance company bundles your insurance into one package, it eliminates the time you take to pay separate insurance bills.

Before you choose an insurance provider, make sure you do your research. Not every company will work for your financial situation and you don't want to regret the decision later. You would be making a wise decision by bundling your auto insurance. You and your wallet will appreciate the savings.