Bundles

Blog → Post by Todd Rehrig August 23rd, 2017 at 9:48 AM
What's the beef with bundles?  Every time you turn on the television or the radio, you see or hear an insurance commercial talking about the importance of bundling your policies.  Why is this so important and how will it impact your life?  These are good questions and hopefully I can shed a little light on this latest trend in the industry.
    I'm sure you won't be shocked if I tell you that insurance companies, just like any other large business, are trying to make money.  If you believe that the CEO and other executives of State Farm or Erie or any other company are only concerned about your health and safety, you're too good for this world.  Insurance companies need to make money to pay claims, pay employees and cover all other expenses, while making a profit to appease investors and stockholders.  At the same time, the industry is so competitive that the margin is very small.  If they charge too much, other companies will undercut their rates and steal their customers.  If they don't charge enough, they risk losing money or not having enough to cover a catastrophic loss.
    In recent years, most insurance carriers have learned that it's easier to maintain a fairly steady rate and to make adjustments using discounts and surcharges.  This enables the company to reduce the premium for people who are less likely to submit claims and raise the premium for those who present a greater risk.  This is why you hear ads for things such as safe driver rewards, replacement cost, accident forgiveness and bundling.
    Statistics show customers who have more than one policy with the same company tend to remain with that company for much longer than people who only have one policy.  So when someone bundles multiple policies with the same insurance carrier, they stay longer.  This is a key factor in making money.  The cost to keep a customer is much less than the cost to gain a new one, so the longer you stay with a company, the better the chances that they can make money from you.
    The good news is that it also benefits you.  Many companies now give bundle discounts larger than 10% of your premium.  In other words, if your auto insurance is $1,000, you could save more than $100 by bundling.  The carrier is willing to do this because over time, it will be more profitable to keep you around than trying to find another customer.  Bundling is a win-win for both the consumer and the company.
    So the next time you review your insurance coverage, think about bundling multiple policies with the same company.  You'll receive some nice discounts, and in many cases, some other benefits, such as a single deductible.
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