Is Bundling Your Insurance Worth It?

Bundling insurance is defined as when a customer buys multiple lines of insurance with the same company in order to simplify management of policies and receive discounts. This is a very prevalent marketing strategy in the captive agency market as there can be benefits to both the consumer and the agency alike.

But is it worth it?

Let’s begin by defining what a captive agency is. A captive agency is one that sells products for only one company. These companies typically have office locations throughout the community. Some examples of these companies are Allstate, State Farm, and AAA. This is contrasted with the independent agency model, which offers products through a number of different insurance providers, providing multiple options for consumers.

Now, let’s take a look at the benefits of bundling. As a consumer, insurance companies are willing to give discounts if you have multiple lines of insurance within your portfolio. For example, if your home and auto insurance is with the same company, you will sometimes receive a small discount on both policies. Another advantage is that you have one system for managing your policies, such as an app or online portal. Yet another benefit is that the majority of captive insurance companies have a business footprint in almost every state, so exposures can be spread out over regions.

However, while there are benefits to bundling insurance policies, there can also be shortcomings. We can sometimes feel these more significantly here in Florida as well simply due to the landscape of the market. Hurricanes can cause significant claims activity for insurance companies, which obviously lowers the profitability of the company as a whole. In recent years, because of these exposures, many of the captive companies have been forced to increase rates or non-renew property policies in higher risk areas, like Florida, in order to be responsible with their entire risk portfolio. The downside of this is that those policies which were bundled together are now either no longer available and/or not cost-effective to do so. Further, as we discussed above, most of the captive companies have a national footprint and exposure, so claims paid in other regions can affect premiums in Florida.

As an example of this, I recently worked with a current client to review their portfolio. We insured the client’s condominium with a regional carrier, while their auto insurance was with a captive company. The client’s auto insurance agent reached out to them for their renewal and offered them a bundled policy for their condominium. On the proposal it included a $200 discount for having both policies with the same company. As any good agent would do, I asked this client if I could look at it the other way and propose their auto insurance through our network of different markets . The result was staggering. I wrote the auto insurance policy for this client and saved them over $900 per year. While this client’s policies are with two different companies, having the ability to work with an independent agent with access to multiple markets ended up providing them with a significant net savings. They were more than willing to give up the small bundling discount and saving the $900 on their car insurance.

So, is bundling worth it? Possibly, but please take the time to look at your assets as a complete package and remember that by working through an independent agent, your choices and options could provide both savings and potentially better coverage. I am proud to say, my clients experience has shown that the benefits of being with an independent agency like Strong Tower Risk Management far outweigh the options you might receive otherwise.

As always, at your service.