When trying to plan insurance coverage packages, you’ll likely come across the concept of bundling. Bundling is when you get multiple insurance coverages from the same carrier, often on the same policy. Under the right circumstances, bundling can significantly benefit both the provider and the insured. A lot of people are introduced to bundling when looking at how to save money on their policies, however, this isn't the best solution for everyone. For many, keeping insurance separate is the better option both logistically and financially. As with any insurance plan, which coverage options will be best is dependent on the needs of the insured. Let’s explore the pros and cons of bundling so you can understand which option may be best for your business.
Pro: Cost Savings
The first pro with bundling coverage is the potential to save money. Carriers will want to get as much of your business as possible, especially when they offer all the coverage you require. To incentivize clients, most carriers will offer significant discounts on bundled premiums, which are known as multi-line or multiproduct discounts. The exact discount will differ between carriers and coverages but can reach as high as 15 - 25%. Some carriers will waive specific coverage premiums associated with the same policy, or in other cases, they will reduce the premium of separate policies. In most cases, policies with the highest original premium will receive the largest discount. If cost is the number one factor when choosing a program, and your carrier offers fair discounts, bundling may be a good option for you.
Do you struggle to keep up with premium deadlines and end up with gaps in coverage or fees? Bundling coverages can help make handling the logistics of your insurance much easier. Since they are with the same carrier and under one multi line package, they likely all have the same renewal date, making payment easier. In addition to payment, if you run into any issues, you will know who to contact and likely have a built relationship with them. Often if you have insurance with multiple carriers, its more challenging to truly get to know them, your agent, and their services available. By working with one carrier, you can build a stronger relationship and they can dive deeper into your needs. Overall, bundling can be much more convenient in the long run.
Pro: Insurance Security
People don’t always consider the fact that a policy with an insurance provider is a two-way relationship. Just as you can leave and go to another carrier, insurance providers can cancel your policy or choose not renew you if they feel you are too much of a risk.. If you get multiple claims on a single policy with its own provider, they will likely reconsider their relationship with you and either cancel your policy or increase your premium dramatically. However, if you have 5 policies and only one policy is getting claims, they are more likely to want to keep the relationship. Having a multiline policy or bundled package will increase your value to the carrier and make it less likely for them to drop you.
Con: Bundling Doesn’t Always Save Money
Though savings seems to be the biggest pro of bundling, not every bundled package will save you money in the long run. Insurance rates are highly individual, so while you may be saving compared to the full price of your carrier’s coverage options, there may be other carriers that offer that coverage as a standalone for cheaper. Additionally, some carriers may offer a discount at the time of signing but slowly increase rates year over year. If you’re not careful, you could end up paying more than you would by keeping your policies separate. It’s easy with a bundled package to just sign off and forget about it, but the key to reaping the benefits is to be diligent in keeping up with market trends and checking in on your rates at least annually.
Con: Sacrificing Quality
Not all insurance carriers offer the same quality of coverage. Some carriers may be top tier in business insurance, but of lower quality in home or auto for example. When you bundle coverage, you are opting to get the same carrier across multiple industries of coverage needs. For some, this is fine and works out to their advantage. For others, who have more complex insurance needs, bundling isnt always the best route. If you know that both your home and auto coverage are high risk and you need the best of the best, you may want to separate these policies and go with the carrier that specializes in that coverage. Speaking to an insurance consultant can help you better understand your coverage needs and if bundling will harm your overall risk protection.
At the end of the day, bundling will always depend on your individual needs. If you are paying attention to the coverages you are selected and make sure your risks are covered, either option could work for you.
Build Your Personalized Insurance Package with ECBM
Having a professional look over your insurance plan is the best way to ensure you have opted for the right coverage and carrier. ECBM has expert agents and consultants who can help understand your unique needs, and decide from an insurance perspective if bundling is the best option for you or your business. Contact us for more information!