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How to 'bundle' auto and home insurance policies to save money

One of the most common ways to score cheaper insurance quotes is to "bundle" your insurance policies.

When you purchase more than one type of insurance from a single carrier, a bundling discount may be applied that reduces your premiums. While the most commonly bundled products are auto and homeowner policies, you can often bundle other types of property/casualty insurance, too.

insurance discountsAccording to the J.D. Power and Associates 2011 U.S National Auto Insurance Study, 58 percent of customers bundle their home and auto policies. When other insurance types are included, the percentage of customers bundling jumps to 77 percent.

Because bundling discounts are widespread, their impact on customer satisfaction have diminished in recent years. J.D. Power found that price breaks such as "accident forgiveness" and "claims-free discounts" have a greater impact on customer satisfaction than bundling.

Advantages of bundling insurance policies

When deciding whether to bundle, it pays to do some research.

Allstate spokesperson Stephanie Sheppard says her company's customers can save up to 30 percent when bundling their home and auto insurance. Adding another policy such as motorcycle coverage can push savings to 35 percent.

In addition to reducing your premium, many insurers offer savings on deductibles. For example, MetLife Auto & Home's GrandProtect program lets consumers pay only the highest deductible on their bundled policies if multiple assets are damaged. For instance, if a tornado damages your house, car and boat, you will pay one deductible (the highest one). The others are waived.

Convenience is another advantage to bundling. It reduces the amount of paperwork and simplifies policy management. You don't have to deal with multiple insurance companies and there is only one renewal date to remember. If you have a claim, you need to call only one company.

In addition, "when insurers have access to all of the consumer's policy information, the insurance adviser can identify coverage gaps and can readily make the necessary coverage recommendations," says Alicia Charles-St. Juste of Amica.

Nonetheless, comparison shop for both bundled and unbundled rates if you're looking for the best deal.

Examining bundled insurance

For the first time, J.D. Power's annual study found that satisfaction with price was higher among "unbundled" customers.

"Bundlers still tend to be more satisfied with their insurers overall, but on price, the monoline carriers have aggressively closed the gap so auto-only customers are every bit as satisfied with the value of their auto policy as their bundled-customer counterparts," says Jeremy Bowler, senior director of the insurance practice at J.D. Power.

Amy Bach, executive director of the United Policyholders consumer group, says you can often get better rates on auto insurance from companies that specialize in that product.

"It's more profitable for insurers to sell auto than it is to sell home insurance, so there's more competition for your auto business, and shopping around will generally get you a better deal than bundling," she says.

Bach also cautions that some companies are better at insuring cars than homes, so examine the protection level on the home insurance policy before bundling.

Before bundling, Sheppard recommends asking for all available discounts. When comparing prices from different companies, make sure the coverage and deductibles are equal.

And note this: "It is not always in your best interest to shop on price alone," says Bach. "Quality matters when it comes to insurance, just like everything else."

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