Does Bundling Insurance Really Save You Money?

It seems like every insurance company wants you to bundle insurance policies and save money. Insurance bundling is heavily advertised, with promises of big discounts and impressive savings. But bundle discounts vary widely from one insurer to another, and it’s not always the best way to save.

In some situations, bundling insurance could actually cost more than what you’d pay if you were shopping for each policy independently. And for military families, PCS moves, deployment, and housing changes complicate the math even further. 

The best way to make sure you’re not overpaying for insurance is by rate-shopping regularly. But before you start requesting quotes, learn when bundling will save you money and when it’s not worth it.

What Does “Bundling Insurance” Actually Mean?

Bundling insurance means you purchase two or more types of policies from the same insurance company, such as homeowners and auto insurance. Insurance bundling is also sometimes referred to as a “multipolicy discount” or “multi-line discount.” 

Insurance bundles aren’t limited to just home and auto coverage. Many insurance companies also let you bundle other types of insurance together, like renters, condo, motorcycle, RV, and life insurance.

When you have multiple policies with the same insurer, it can simplify your finances by letting you manage different coverages under one account. You can renew policies, pay your premiums, and file a claim all in one place, and often for less than buying each policy separately.

But while you can sometimes “bundle and save,” as the marketing suggests, other times bundling isn’t the cheapest option.

How Much Can You Save by Bundling?

Insurance bundle discounts can range from 5% to 25%, but it varies widely by insurer and by state. 

The Wall Street Journal analyzed major car insurance companies and estimates savings of 13% when bundling home and auto.

Progressive states that the new customers who save money at all save an average of $1,086 per year. (Keep in mind, though, that this figure doesn’t include customers who didn’t save at all.) State Farm says its new customers save up to $1,429 when they bundle. And USAA says its customers save up to 10% when bundling home and auto together. 

Bundling discounts are often built into the insurer’s pricing models. By subsidizing a lower rate on insurance premiums, they can attract new business. The insurance company gets a new customer, and you get a discount on something you needed to buy anyway. 

The amount you save will depend on multiple factors, including where you live, the coverage limits you select, your home and vehicle values, and your driving record. 

When Bundling Insurance Saves You Money

Insurance bundling can work well in some situations. You’ll likely save more by bundling compared to shopping for each policy individually when:

• Your insurance company offers competitive rates for both policies. A bundle discount can enhance your savings. 
• You’re settled and stable in one location. Your ZIP code has a big effect on home and auto rates. Staying put means your policies can stay the same, too, making it easier to calculate (and retain) your savings.
• You have multiple policies to bundle together. Bundling home and auto could net you a small discount, but adding a third policy, like umbrella insurance, could score you bigger savings.

When Bundling Can Cost More

Even with a bundle discount, sometimes bundling your insurance policies together is more expensive. Consider these scenarios:

• Your insurer’s base rates aren’t competitive. If the insurance rates for each policy type are high to begin with, a small discount won’t make a meaningful difference. A 15% discount on rates that are 30% higher than competitors still means you’re overpaying.
• There are better standalone policies elsewhere. If your insurance company offers great rates on one type of policy but not another, combining the two could still leave you paying more than you need to. For example, your insurer may offer great auto coverage at low rates, but their renters insurance is expensive (or vice versa) — overall, you’re not getting the best deal. 
• PCS moves change your rate dramatically. PCS orders could put you in a different ZIP code, a different state, or even a different country. Insurance rates vary significantly by location, so if you’re stationed in an area with high home or auto insurance rates, bundling prevents you from rate-shopping for a more competitive deal. Plus, not all bundle discounts apply in all states, so you could lose your discount when you move.
• Policy timing disqualifies you for the discount. Some insurers require you to buy both policies at the same time to receive a bundle discount. If you need auto insurance now, but won’t need home insurance for another six months, bundling policies won’t result in savings.

Before you decide on bundling vs. standalone policies for your insurance needs, you’ll need to compare hard numbers so you can be certain where your best options are.

You can start by contacting your current insurer and asking about the price of adding another policy type to your coverage. Then shop for additional quotes from other companies.

1. Request individual quotes for each policy type. For each insurer, request one quote for auto and one for the other type of policy you’re considering, such as homeowners, renters, or condo insurance.
2. Request a bundle quote from each insurer. Most insurers give you an option to select additional policies when you request a quote online, so you can start with an auto quote and then add condo insurance, for example.
3. Compare the price of standalone policies to bundled policies. Does it cost less to bundle the two policies together with the same insurer? Or is it more affordable to buy one policy type here and another policy type somewhere else? 
4. Make apples-to-apples comparisons. When you’re requesting quotes, it’s very important to keep your coverage selections the same. That means choosing the same deductible, the same policy limits, and the same optional coverages. It may help to note what your current coverages are so you can keep them the same.
5. Look for other discount opportunities. Bundling isn’t the only way to save on multiple policies. As a military member or veteran, you could be eligible for military discounts at insurers like GEICO, Farmers, or Armed Forces Insurance (AFI). There are also discounts for safe driving, low mileage, paying in full, multiple vehicles, automatic payments, or vehicle safety features, among many others. Make sure your quotes reflect all the savings you qualify for.

Questions to Ask

Another important step is to ask each insurer what happens to your bundle discount if you need to PCS to a new state mid-policy:

• Does the discount cross state lines with you?
• Will it be recalculated right away, or when you renew?
• Will you lose the discount if one policy lapses or is canceled?

Special Considerations for Military Families

Many military members assume they’ll find the lowest rates with an insurance bundle from USAA. While you may qualify for lower rates than those who don’t qualify for USAA membership, it’s possible you may find greater savings elsewhere, so don’t stop with just one quote. 

Your rate depends on so many factors that you should always comparison shop to make sure you’re getting the best deal. It’s especially important if you’re moving frequently or facing deployment, as those events can have a big impact on your rates.

How PCSing Impacts Insurance

PCS moves can reset your pricing by changing your address or garaging ZIP code. Different states have different car insurance requirements, which can change the math on savings. For example, suppose your new state requires Personal Injury Protection and Uninsured Motorist coverage, where your old one didn’t. You’ll need to add those coverages to your policy to stay compliant with the law, and that could change your rates.

Whether you bring your vehicle, store it on base, or leave it with a family member will also affect your costs. For instance, USAA offers a discount of up to 15% off the comprehensive portion of the policy.

Keep in mind that you may want to settle your home or renters insurance before you move, not after, so your belongings could be protected. Check whether your new policy will cover you during a move.

Finally, frequent moves could mean abrupt transitions between being a renter and being a homeowner. Renters insurance is typically much cheaper than homeowners insurance, because it only protects your belongings, not the structure itself. If you switch from bundling auto and renters to auto and homeowners, you might find your new rate is higher than you hoped, even with a bundle discount. It could be worth unbundling your policies to find a better deal.

How to Decide If Bundling Is Worth It

You’ve done your research—now it’s decision time. Here’s how to know for sure if an insurance bundle is worth it for military members and their families. 

You SHOULD bundle insurance if:

• The insurance bundle quote is cheaper than standalone policies.
• You don’t mind switching providers (and the paperwork that goes with it).
• You want to manage all of your insurance needs in one place.
• To the best of your knowledge, you’ll be staying put for more than a year.
• You’re happy with the value of the bundle (the level of coverage compared to the price).
• You don’t need any special coverages or policy types that could be better handled by another provider (like classic car coverage, for example).

You likely SHOULD NOT bundle insurance if:

• The cost of an insurance bundle is higher than your quotes for separate policies.
• You expect deployment or PCS orders soon that would impact your rates.
• You need special insurance coverage (SR-22, poor driving record, property in a high-risk area).
• You have a teen driver in your household (you may find cheaper coverage without bundling).
• One of the policies is overpriced compared to the market.

Bottom Line

Of course, only you know the best fit for your budget, your risk factors, and your patience for managing multiple policies. But overall, bundling can really save you money, but only if you run the numbers first to make sure.

The important thing to remember is that you may receive a great discount upfront, but years of loyalty to one company won’t guarantee you low rates. Even if you stay in your current home and keep your current car, market conditions and insurer rate adjustments could still cause your rate to go up. The best way to know if you’re still saving money is to compare quotes regularly.