Selling bundled auto and home insurance can lower premiums and help you retain clients.Insurance agents have long argued that bundling insurance policies with one insurer can streamline and reduce monthly premium payments. Recent research offers proof of the practice’s benefits.
The fourth annual InsuranceQuotes study revealed that consumers earn significant discounts when purchasing two or more policies from the same insurer. Bundling homeowner and auto policies offers the highest discounts, with average annual savings of 16.1% nationwide, but pairing other coverages also produces lower overall premiums. Packaging auto and condo insurance, for example, results in a premium discount of 11.6%, while an auto policy coupled with renters insurance cuts 7.9% from the price. Discounts for those bundled packages tend to be less than an auto/homeowner combination because renters and condo insurance policies are generally cheaper than home insurance.
The InsuranceQuotes study was offered by Quadrant Information Services, which calculated bundled discounts bought by a hypothetical 45-year-old married woman with a bachelor's degree, superior credit score, and continuous coverage. While the percentages are based on national averages, Quadrant notes that discounts can vary greatly between each state. Mississippi residents, for example, enjoyed the highest discount — 23.2% — when they purchased a combined home and auto package.
Bundling for Loyalty, Customer Satisfaction
While consumers enjoy discounts from when buying bundled policies, insurers and agents benefit, as well. In today’s competitive insurance marketplace, insurers and agents offering multiple coverages with one company have a better chance of retaining their clients instead of seeing them bolt as soon as a policy is up for renewal.
According to Charlotte Burr, the owner of Tempe, Arizona’s AZ Insurance Team, clients who purchase bundled coverages save the insurance company money because they file fewer claims. “Customers who have more than one line of business with an insurance company tend to be more stable and tend to stick around longer,” Burr told InsuranceQuotes, “allowing the insurance company to collect more in premiums — because it’s always cheaper to retain business than find new business.”
Better Deal on Deductibles
In addition to discounted premiums, insurance agents should also stress that bundled policies often have significantly lower deductibles. An article on HomeInsurance.com points out that the policyholder pays the deductibles for separately purchased home and auto policies if both are damaged by a hailstorm. Some insurers like MetLife, however, offer a single deductible when policies are bought together.
Of course, cross-selling coverages and bundled packages carries some risks. A study from the University of Chicago found that while consumers prefer the convenience offered by buying in bulk, they quickly become dissatisfied if one of the items in the package fails to perform up to expectations or is suddenly withdrawn from it. They’re also reluctant to add more products into the package at an extra cost.
As with any sale, agents must administer excellent customer service for all the policies in the bundle. And most importantly, any policy sold to a client — whether separately or in a package — needs to fully cover all the client’s potential risks.