Disadvantages of Bundling Policies

Bundling car insurance with other policies may seem the smart thing to do. And in the vast majority of cases it really is. But there are cases and scenarios when bundled plans may give you headaches. Of course, we attempt to bundle plans in order to save some money. This is why you should first get online auto quote, compare prices before and after bundling, then talk with insurer.

It is less likely for a customer to look around for other carriers when they have bundled. And insurance companies know that. It is not tempting to shop around, because if they switch, they’ll lose discounts, and if they switch everything, it becomes very complicated very quickly. So, insurance companies can increase one policy a little and they know the customer will be unlikely to leave. This process is called price optimization and it is used by some insurers throughout the auto industry.

Getting simplified paperwork may not always run as smooth as intended.  Insurance premiums are due each month on the date you opened your policy. So, if you get one policy on the 15th and then add another a few months or years later on the 3rd, you’ll still have bills due twice a month, even if the insurance is with the same company. Synching the billing date may be a real challenge for those who want to simplify the paperwork.

Third party lenders also represent a downside. Many insurance companies specializing in one type of insurance will give their customers the option of bundling other types of insurance, but they will sometimes use a third party to underwrite additional policies.  If one part of your bundle is underwritten by a second company, you’ll still need to deal with both companies in the event of a policy claim on both. For example, when a natural disaster damages both your home and your car.

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