Don’t overpay for your car and home insurance
If you own a car and a house, you’re already paying for two separate insurance policies — likely with two different companies. Those premiums can add up quickly.
Luckily, there’s a simple way to cut down on insurance costs. By bundling your car and home insurance with the same company, you may be able to reduce your rates by as much as 25 percent. That could be serious cash back in your pocket each month.
If you aren’t already bundling your car and home insurance, here’s what you should know.
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Car and home insurance bundle: How does it work?
Bundling your car and home insurance policy (or a car and renter’s insurance policy) is one of the easiest ways to save money each month. This involves getting multiple insurance policies with the same company, which can help lower your premiums by as much as 25 percent.
Having more than one policy with the same insurer indicates loyalty, and insurance companies often reward customers for their loyalty.
Not only can you save money, but bundling also simplifies your finances because you’ll work with a single insurance company for multiple policies.
But while bundling has its advantages, insurance premiums can increase from year to year. For this reason, it’s smart to periodically shop around and compare bundles with other companies.
Who has the best car and home insurance bundle?
Even though many car and home insurance companies offer bundles, no single insurer is the best. One study found that State Farm, Allstate, and USAA tend to offer the biggest bundling discounts. But different factors influence your premium, so shopping around is the only way to find the best rate.
Factors that impact your insurance rates
Your risk level — and the projected cost to repair or replace your car — ultimately determines your auto insurance premium. For example, premiums are higher for newer and luxury cars. Likewise, younger drivers typically pay more for car insurance compared to older drivers.
Additionally, some states charge male drivers higher premiums. And you might pay more for car insurance if you live in a high-crime area.
Things that can influence your insurance premium include:
- Driving history
- Insurance/claims history
- The type of car
- Vehicle ownership status
The same general principle goes for homeowners insurance: The more at-risk your home is for disasters like fire and flooding, the more it will cost to insure.
Insurance providers take these factors into consideration when rating customers. The less risky your rating, the less you’ll pay for your can and homeowners insurance coverage.
What if I already have car and home insurance with separate companies?
There’s a good chance that you already have multiple insurance policies with different providers. You might ask: Can I switch in the middle of my policy and bundle with another company?
The short answer is yes. Whether you have car, home, or renter’s insurance, you don’t have to wait until your policy expires to get a new one.
But although you can switch at any time, canceling insurance mid-policy could result in a penalty or fee. This fee is typically 10% of your remaining premium, although some companies don’t charge cancellation fees.
Canceling insurance mid-policy could result in a penalty or fee. To avoid a penalty, shop for car and home insurance bundles when at least one of your policies is up for renewal.
To avoid a penalty, shop for car and home insurance bundles when at least one of your policies is up for renewal. Policies typically renew every six months or once per year, and you’ll receive a renewal letter from your insurance provider in advance. This provides time to shop around and compare rates.
To compare rates, contact your current providers and request a rate quote for bundling your car and home insurance (or another policy). Also, contact a few other providers for free quotes.
Once you purchase your new policy, contact your former insurer and cancel your old policy. The cancellation process varies. Some companies allow over-the-phone cancellations, whereas others require faxing or mailing in a cancellation form.
More ways to save on car insurance
The average cost for full coverage car insurance is over $1,000 per year on average. These policies offer different types of protection, for example:
- Liability: Covers damages you cause to another driver’s car
- Collision: Covers damages to your own car
- Comprehensive: Covers non-crash-related damages to your car
Your specific coverage levels, your history as a driver, and your vehicle determine your car insurance rate. Even so, you can take steps to lower your premium.
1. Shop around
Car insurance rates (as well as home insurance rates) vary from provider to provider. So it’s important to shop around and compare premiums with different insurers. Ideally, you should get at least three rate quotes.
It’s estimated that price shopping saves customers hundreds of dollars each year — and the savings could be even bigger if you have poor credit or an imperfect driving record, in which case the difference in rates may be more extreme.
When you’re shopping around, make sure each of your car insurance quotes contains the same types and levels of coverage, as well as the same deductible. This will give you the most accurate side-by-side comparison so you know which company is truly the cheapest.
2. Ask about discounts
Insurance discounts also vary from one company to the next, so ask your agent about their specific offers. To save money, take advantage of as many discounts as possible.
Discounts you might not know about include:
- Low mileage discount: If you drive less than a certain number of miles per year (often 7,500 to 12,000), your provider might discount your car insurance premium. This discount could reduce your insurance rate by as much as 30%
- Good driver discount: You might receive a discount (up to 20%) if it’s been more than three years since your last accident, speeding ticket, or other traffic violation
- Defensive driver discount: Most insurance companies give discounts when a driver takes a defensive driving class. This discount can range from 5% to 10%
- Military and federal worker discount: If you’re in the military or a federal worker, you might qualify for insurance savings up to 15% or more
- Anti-theft discount: Installing safety devices like an alarm system, steering wheel lock, and brake locks reduces the likelihood of theft, and you might save up to 15% per year
- Good student discount: Younger drivers typically pay higher auto insurance rates. However, some providers offer good student discounts. This is available to high school and college students (between the ages of 16 and 24) with a GPA of 3.0 or higher. They can save around 10% to 15% off their premium
3. Raise your deductible
Your insurance deductible is what you pay out of pocket before your insurance provider pays out on a claim. Average deductibles can range from $500 to $1,000. In general, the lower your deductible is, the higher your insurance premium will be. Therefore, increasing your deductible can reduce your monthly insurance rate substantially.
4. Maintain good credit
Good credit isn’t only beneficial when applying for loans. It can also result in lower insurance premiums. Pay your bills on time, dispute errors on your credit report, and pay down credit card balances to help improve your credit score and lower your car and home insurance rates.
Your next steps
Bundling car and homeowners insurance can save you, well, a bundle. So it’s worth it to shop around and see which companies offer the biggest bundling discounts.
If you’re just preparing to buy a home, it’s a perfect time to compare insurers. You might find a good deal by bundling with your current auto insurance company. Or you might save more by choosing a homeowners insurance company with a lower rate and moving your auto policy to that provider.
Remember that you’re free to cancel an insurance policy at any time and if you can find a better rate, it’s often worth your while.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.