Can You Save Money Bundling Home and Auto Insurance?

WRITTEN BY: Mark Romero


The answer to this question is, yes – for a little while. Most insurance companies will offer discounts for bundling homeowners and auto policies but you still have to shop around each year to get the best price. 

For the insurance company, there is nothing but upside for offering a discount to customers for buying more than one policy. But for consumers, the upside comes with conditions and responsibilities if you want to ensure you have the best deal possible.

Let’s take a moment and look at the advantages of bundling for consumers:

  • Generally speaking, bundling your insurance can save you 5% – 25% off the “rack rate” of individual policies. The larger (percentage-wise) discounts usually apply to the more expensive policy which in almost every case will be the homeowner coverage
  • There’s a convenience factor to consider. If you have an insurance agent you can do the bundling all in one sitting. He or she can check packages from a number of companies eliminating the need for you doing all the research.
  • Having multiple policies with the same company means you can manage them from a single web portal. 
  • If you have a lead foot or are accident-prone, you are less likely to have your auto policy canceled when you file a claim or get points on your license if you have other policies with the carrier.

And for the insurance companies: 

  • The number one rule of all sales organizations is it costs less to upsell an existing customer than to find and sell to a new customer. Selling the benefits of bundling cuts the cost of acquisition in half. 
  • Customers who have more than one policy are less likely to shop around at price at renewal time. This is key to the profitability of the discounts. 

Insurance companies like to notch up the premiums a little every year at renewal time. In the business, this practice is known as price optimization. Optimal pricing means bumping the premium a little bit but not so much that the customer will start comparison shopping. Over a few years of price optimizing, your bundle discount will be more expensive than buying individual policies from competitors.

So, is bundling a good thing or not?

Tips for Better Bundling

In most cases, you will save by bundling, at least initially. 

The person who is going to get the biggest break is someone who currently has very expensive home insurance and cheap car insurance. The “bundle” package offers bigger discounts on homeowner insurance. Consequently, the consumer with expensive home coverage and cheap auto insurance will benefit the most.

On the other hand, if you are driving a Mustang GT or Dodge Challenger Demon, have bad credit, or you have a less than stellar driving record, the new “discounted” bundled auto insurance may cost more than your current policy. Finding the cheapest car insurance available may dwarf any discount you get on a homeowner policy.

Your ultimate goal is to save money on your insurance policies. To meet that goal is going to require some effort on your part. 

Here’s what we suggest:

  • If you have an independent insurance agent you have a leg up. He or she knows your local market and has an understanding of the insurers’ underwriting requirements. Your agent is “your friend in the business” and can do the legwork that you will have to do if you decide to go it alone in the search for the least expensive policies and packages.
  • If you go solo, use an online marketplace like AgileRates. That will help you compare home quotes and auto quotes to find the least expensive policies that meet your needs. Once you have identified the cheapest individual policies, go back and add the second policy and see what their bundled results are. This exercise will give you the combined price of two separate policies and the price of bundled packages. If the combined price of the two policies is less than the best bundle, there is obviously no reason to bundle.
  • Check prices again before renewal. If you do select a bundled package, go through the exercise shown above about a month before renewal. If your package runs true to industry standards, it will go up a few dollars at renewal. Maybe it won’t be worth the hassle to change right away, but after three or four years of price optimization, you could be talking significant money.

Finding the best deal takes some work. AgileRates can take that load off your back and more importantly, be your one-stop source for all your insurance needs and questions.