Geico’s talking lizard and Progressive’s perky Flo claim that bundling insurance policies and switching insurance companies can help you save money. It’s true. Shopping around for new homeowners or auto insurance policies could save you hundreds of thousands. Your savings may be even greater if you combine your policies with the same insurer. According to Ashlee Tilford (managing editor at Insurance.com), bundlers can save on average 17% on their insurance premiums or $730 per year. Bundling can reduce your premiums up to 35% in some cases.
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To know that you’re getting the best price–and avoiding price optimization–experts suggest you reshop your policy at least once a year. Even though you’re not affected by price optimization companies will weigh risk factors differently which can lead to different prices. Nearly all the major companies, such as Allstate, Geico and Progressive, offer a bundle product. You should also consider rates offered by companies that only operate in your area or deal with a specific group of people. Auto-Owners is headquartered in Lansing (Mich.) and operates in 25 states, with a majority of its business in the Midwest or South. Erie Insurance is headquartered in Erie (Pa.) and operates in 12 US states and the District of Columbia.
How to shop
You can download and print your insurance declarations page to help you compare policies. This page summarizes your current coverage and includes information such as your policy limits, premiums and deductibles. It can also be used to compare your options with other insurers. Companies that offer low bundle rates could skimp on essential coverage or base their rates on a higher deductible than what you have.
If you are a high-risk driver, the insurance company that insures your house has extremely high auto insurance rates. Tilford suggests that you shop around to find the best rates on car insurance for high-risk drivers. This will help you determine if bundling is a better option.
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Coverage Limits and Deductibles
Shopping with declarations pages will allow you to maintain your current coverage, regardless of whether you receive a discount for bundling. Comparison shopping is a great way to check whether your coverage is adequate and current.
Make sure that you have sufficient insurance to cover your property and liability. The total replacement cost of your house and possessions is your target number. The tools to estimate the replacement cost of your home should be available from your agent or insurer. You should note any additions or upgrades to your property.
You might consider an extended replacement cost policy if you are concerned about your replacement coverage. This usually covers an increase in labor and material costs, which is often the result of a major disaster that causes widespread damage to many homes. This rider can be added to your policy for $25-50 per year.
Tilford recommends that auto insurance cover liability coverage not exceed $100,000 for bodily injuries to one person, $300,000.00 to cover everyone involved in an accident, and $100,000 for property damage. You can increase your liability coverage by purchasing an umbrella policy. This will allow you to cover more people at a lower cost. A $1 million coverage policy typically costs $200-$400 per year. The next $1 million covers $75-$100.
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High-Risk Disasters
If your home is located in an area that is prone to disasters, bundling home and auto insurance might not be an option. Florida is an excellent example.
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ValChoice CEO Dan Karr says that many companies aren’t interested in selling home insurance in Florida. Bundling may not be something that companies want to do. He says that the risk in car insurance is no higher than elsewhere, and there are more companies who will sell an auto policy rather than a bundled home or home product.