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A Bundle of Joy?

Bundling is everywhere this summer, absolutely everywhere.  And we are not talking about the delivery efforts of storks or that fascinating old New England courtship custom (you remember the one: a young couple would be put together to bed, fully clothed, within earshot of the entire household, so they could get to know each other in the relative warmth and comfort such an arrangement provided.  Practical folks, our forefathers – it was an ingenious solution).  No, the bundling we are talking about is the process of offering or acquiring two or more goods or services from a single vendor for one price.  Theoretically, a lower price.

TV and cable services come to mind first, of course.  Software products, too.  For that matter, even restaurants do it with menu combinations.   And the idea is very, very tempting.  We don’t have to deal with multiple vendors but we still get a bunch of different stuff.  This is one-stop shopping at its best.  We write one check to pay the bill, we call one customer service department with complaints or service problems.  It is really, really convenient.  To top it all off, they always show us the savings we enjoy when we do things this way.  Potential savings, that is.

Keep in mind, however, that all vendors do this for their own dollar-driven reasons.  They know it promotes customer loyalty.  They know we are far less likely to switch to another vendor for any of the services once they have us signed up, even when the savings for such loyalty are not that compelling.  Their internal administrative processes are simplified; they are paid more promptly.

If you are checking out ways to save on insurance, you will have run into bundling offers at every turn.  Indeed, combining home and auto insurance is a big industry marketing trend.  And sometimes, it’s a great approach, particularly with similar lines of business, as in property casualty coverage (homeowners, auto, renters and the like).  It may be a bit less sound when you combine auto and home and life products.  Remember, life and health products are in a different category, handled by separately licensed and trained agents.  Of course, some agents are licensed to handle both lines, but they are indeed different  insurance categories. Your state insurance department will have more information on these distinctions, and regulations vary from state to state.

Some of the pros of bundling include:

  • Lower monthly premiums.  Nearly every carrier offers a multi-policy discount.  If it works for you – and you will need to do your homework here – you may save 10-20 percent.
  • Simplified renewals. All-inclusive packages do indeed make the renewal process easier.  You can make changes to your policies at this time as well.  There is less risk of coverage lapses.
  • Single insurance invoice.  This maybe sheer laziness on our part, but this is a very appealing part of bundling.  We write one check after receiving a single, consolidated statement.
  • Loyalty rewards.  If we stay with a carrier long enough, we just might be in line for some loyalty discounts, reductions in premiums offered to long-term customers.
Now, for the cons – and of course, there are some:
  • Good value for the money?:  You have to be pretty confident you know what you are reading as you examine a policy that combines, say, homeowners and auto.  There are limits and exclusions to navigate, with policy overlap a potential sticking point.  What rules are in place here?  You are out driving, for instance, and your laptop is on the seat beside you.  You have an accident and that laptop, along with some other stuff potentially covered by your homeowners, is destroyed.  Are these losses covered by the auto portion of the policy?  The homeowners? Do I need to file separate claims?  And what about the separate deductibles for the auto and homeowners?  Aghhh!  See what we mean?
  • Oops! Filed a claim! Now what?: You surely understand that your homeowners policy is for big perils and not for making little claims.  You need to keep your record clean so it is in place for a major claim, should that day come.  If you have bundled things and have to make a claim, know that the premiums will very like rise on all the policies in the package.
  • Just doesn’t work:  If you have access to a good group health plan at work, it makes no sense at all to bundle your health coverage into your homeowners package.  And maybe the insurer doesn’t offer renters coverage, something you need.  The same is true of life insurance – what’s great for your house and car may not be even remotely appropriate for your life insurance.  Don’t let convenience be your only barometer.  You still have the right to expect good value for your money on all portions of the package.
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