How Bundling Your Policies Can Save You Money on Your Car Insurance

One of the simplest ways to save money on car insurance is to "bundle" your insurance policies. Large insurance companies typically offer multi policy or multi line discounts when you purchase multiple insurance policies from them. Bundling may help you get a great deal after you shop around and calculate all of your available discounts.

What types of insurance policies can you bundle?

Insurance companies such as Geico, State Farm, Allstate, and Progressive provide a wide range of coverage, including homeowners, renters, condo, life, boat, and travel insurance, among others. If it can be insured, chances are one of them can insure it. Keep in mind, however, that not all types of insurance can be bundled with your car insurance policy. The table below shows which types of policies can be bundled by the major automobile insurance companies.

How good is the discount?

Not all bundles are created equal. An auto-home bundle, for example, typically yields a greater discount than an auto-condo discount. Furthermore, some discounts are dependent on when you purchase your policies. We'll look at the four largest auto insurers in the country and the discounts you can get by bundling policies below.

State Farm

You may have a number of different insurance policies with State Farm, but they will only discount one bundle — the one that provides the greatest savings. We examined a $1,509 State Farm auto quote from Alabama to see how the discount might look with a few different bundled policies.

Homeowners insurance can be quite expensive — thousands of dollars per year — so it stands to reason that it offers a greater discount than renters insurance. An umbrella policy provides additional liability insurance beyond what your standard policy may already provide, making it more expensive overall. It stands to reason that the two most expensive policies provide the best bundle discount. State Farm is also distinct in that it will combine a farm/ranch policy with your auto policy.

Geico

Geico provides a flat 3% discount regardless of the type of policy you bundle — as long as it is a renters, condo, mobile home, or homeowners policy. We looked at a New York quote to see how a bundled policy would affect rates. Geico provided a yearly auto insurance quote of $1,546 for our sample 30-year-old male driver. The driver would save $47 per year with the 3% discount. In comparison, the same package from State Farm would save this driver $232 per year.

Allstate

Every Allstate insurance bundle comes with a different discount. To investigate Allstate's loyalty discount, we looked at rates in Ohio. The size of the discount corresponds to the cost of the second policy. Allstate lists a discount of up to 25% off on its main website, implying that the discounts listed below may be higher in different states. The annual cost of our sample auto quote was $1,056.

Again, homeowners insurance takes the top spot because it is the most expensive type of insurance. The absence of life insurance policies is a notable difference between State Farm and Allstate. State Farm is the company to go with if you want to combine your auto and life insurance policies.

Progressive

Progressive allows you to combine multiple lines at the same time, including homeowners, mobile homes, snowmobiles, boats, and more. They categorize those policies into three categories. The first category includes all types of "dwelling" insurance (homeowners, renters, condo), the second category includes secondary vehicles (motor home, snowmobile, boat), and the final category includes umbrella policies. The size of the discount is also determined by when you purchased the secondary policies. We looked at Rhode Island quotes and used a $1,791 annual premium as an example.

Progressive clearly encourages customers to buy everything at once in order to receive the largest discount. If you purchased an auto policy, as well as a homeowners, motorcycle, and umbrella policy, within the first year of your Progressive auto policy, you would receive a 17 percent discount on your yearly premium. Many people fall into the last category: they have a Progressive auto policy for a while and then think about switching their homeowners policy to Progressive as well. If you do not have a secondary vehicle or umbrella policy to insure, the discount is a meagre 5%.

It's also a good idea to have a homeowners insurance policy. If you have anything other than homeowners insurance, such as renters or condo insurance, expect the discount to be cut in half. If you have a renters policy, the 17 percent discount drops to 9 percent. Without any type of home insurance — for example, if you combine an auto policy with an umbrella policy — the best discount you can get is 5%.

Discounts on the secondary policy

Also, keep in mind that the secondary policy, such as your home insurance, will be discounted as well. Allstate claims policyholders can save up to 35% off on its website. We discovered a 15% discount at State Farm. We go into greater detail about bundling homeowners policies here. Remember that homeowners policies are typically more expensive than auto insurance, so a significant discount on that premium can make bundling even more appealing.

Final thoughts

Shopping around is the golden rule of auto insurance, and really all types of insurance. If you are serious about saving money on your annual premium, you should get quotes from every insurer in your area. Take an inventory of everything you want insured and determine which option is the most cost-effective. It's pointless to switch to Allstate to save 15% if its auto insurance policy is 20% more expensive than your current one. And there's no point in bundling with Geico because they only offer a 3% discount on your auto policy. At the end of the day, bundling can be a great way to save money as long as one company offers you the best prices.