Bundling Home and Car Insurance: How Much Can You Save?

Insurance is like the umbrella you keep in the trunk of the car: you hope you don’t need to use it, but it is a lifesaver when you are caught in a rainstorm. Both auto and home insurance can add to your financial burden, but it is not something you want to be without if an accident does happen.

According to the 2023 Your Driving Costs study by AAA, the average driver pays $1,765 a year for full-coverage auto insurance. That’s a big cost to budget for if you don’t end up using it, but a small expense if you consider that the average accident without an injury can set you back as much as $7,100, according to the National Safety Council.

One way to cut your insurance costs is to look for providers that offer a discount for bundling your auto and home insurance. Here are the benefits of bundling your policies plus tips on how to save even more on the best car insurance.

What is insurance bundling?

Major insurance providers like Allstate, Geico, and Progressive offer various types of insurance, which may include car insurance, home insurance, renter’s insurance or life insurance. Since you probably need more than one type of insurance, it can make more sense to have all of your policies under one company. Thankfully the company rewards these types of customers with a multi-policy discount.

How much can you save by bundling insurance?

A multi-policy discount typically offers a reduction on your insurance payments (premiums) if you purchase two or more policies through the same company. So if you buy a home and car insurance bundle, you might expect savings of 10% or more on one or both of your policies.

The savings will vary based on the company and you. For example, Progressive says that a 5% savings is average while State Farm says bundling auto with renter insurance saves an average of $704 per year. Liberty Mutual found that new customers saved an average of $950 when they bundled home and car. Personally, my savings in the past when I bundled my insurance was on the modest side — about $250 a year, but this is also because I went with lower-priced companies.

Multi-policy discounts are common on home and car insurance bundles, but you’ll also find discounts for other bundles, like life and car insurance or multi-vehicle policies. If you rent a home or own a condo, certain companies also offer bundling discounts that include renters or condo insurance.

Recently, I’ve noticed more insurance limitations for homeowners in California and Florida. For example, as a California resident, homeowner’s insurance is nearly impossible to get in some areas due to the rising costs of homes. I am not able to take advantage of bundling deals now for house and auto because most companies no longer offer new policies to California residents. So while it is a good idea to comparison shop bundled deals, know that if you live in one of these states, you might not be able to get a new policy.

The benefits of a home and car insurance bundle

Getting a home and car insurance bundle can help you save money on your premiums. But it’s not the only benefit you can receive from bundling insurance policies together. Be sure to factor in these benefits when comparing insurance quotes from different providers:

• Multi-policy discount: Getting a discount on your premiums is likely the biggest reason to bundle your policies. If you’re already buying multiple policies, it makes sense to look for a multi-policy discount that suits your needs. This could cover your insurance requirements and save you money at the same time.
• Simple management: It’s likely less hassle to manage your payments and policies if they’re all under the same roof. Instead of using multiple websites or mobile apps, you get to see all your information in the same place. This can save you loads of time, as well as potential headaches from making account changes or tracking payments to different providers. It’s hard to put a price on convenience, but it makes a difference.
• Loyalty perks: Certain insurance providers offer rewards or benefits to their loyal customers. This means if you stay with one insurance company for a while, you could receive additional benefits for your time. This could include reimbursement for a lost car key or a discount on your insurance policy. If you bundle policies with the same company, it’s easier to stick with it and earn more benefits over time.
• Streamlined claims process: Filing a claim can be stressful, but having both home and car insurance with the same provider can simplify the process. Many insurers offer a streamlined claims process for bundled policies, making it easier to resolve issues quickly and efficiently.

Tips on how to bundle and save

You already need the insurance coverage on more than one policy, so you might as well bundle and save. However, there are some tips to keep in mind so you don’t fall into the illusion that you are saving money when you really aren’t.

• Don’t buy more insurance than you need. If bundling policies means getting more insurance coverage than you want or need, it may not be worth it. Insurance companies can make it look like you are getting a better deal by saying you are saving hundreds by bundling, but don’t forget to price out your desired plans individually. Know how much car insurance you need before shopping around. This will help you get what you need without buying a policy that has too much coverage.
• Comparison shop. It’s easy to bundle policies with the same provider. But that doesn’t mean you’re getting the best deal. Check all the policies in your area to see what’s available before making a decision. This may involve using an insurance marketplace to get quick and reliable quotes or talking to an independent insurance agent who works with multiple providers. You might end up with a less expensive policy that beats the savings on a multi-policy discount.
• Look for other discounts. Typically, multi-policy discounts save you 10% to 15% off, but it is not always the best discount. Many years ago, it made more financial sense for me to get auto insurance through Costco instead of bundling it with another company because of my membership discount. Other popular insurance discounts include good student discounts, military discounts, and discounted perks if you shop through your place of employment.

  

  
  

• Read the terms. Be aware of affiliate insurers, or third-party companies, that your insurance provider may use to handle a part of your bundle. This is a common practice, but it can make it more difficult to manage your policies if you still have to deal with different companies. If the discount is more important than the convenience, it could still be worth it to deal with third-party providers.
• Check for fees: If you’re not sure how to switch car insurance, it’s not that complicated. But one thing to be aware of is that you might incur a cancellation fee if you cancel your existing policy early. If you are subject to a cancellation fee, make sure it’s less than your potential savings on the new policy.

FAQs

Bottom line

If you think a home and car insurance bundle could save you money, you’re likely correct. Multi-policy insurance discounts are one of the easiest ways to save money on car insurance and other insurance premiums. In addition, it puts your policies together under the same company, which makes it easier to manage your accounts and payments.

But don’t go for the first multi-policy discount you see. I had to spend over two hours getting different bundling quotes and making sure I was comparing apples to apples. However, this time was well spent since I was able to save about $250 on my insurance cost at the time — that’s like working for $125 an hour. Remember that a multi-policy discount isn’t always the best option for saving money. It is also a good idea to think outside the auto and home bundling package — adding term life insurance on top of your vehicle insurance could result in the same big discount.

Do your due diligence and research the available deals in your area from every insurance provider. This will help you find both the best discounts and best coverage options, whether you end up bundling or not.