Save money, time with consolidated insurance coverage
Consumers can save a bundle by bundling insurance
policies with one company.
In addition to saving you money, consolidating coverage could
make your life easier. Instead of dealing with two or three insurance companies,
you just have to make one phone call.
"You're gaining a broad level of protection by having everything
covered with one company, plus it's a great convenience," says Noel Edsall,
director of product development at Met-Life's Auto and Home Division, Warwick,
Savings can amount to anywhere from 10 percent to 20 percent,
according to insurance companies and agents.
Normally, a family will buy homeowners and car insurance policies
from the same company to earn a discount. Some companies have set up packages
that combine the most-common types of personal property coverage.
Even the pros use the technique. Jim Armitage, principal of Arroyo
Insurance Services Inc. in South Pasadena, Calif., saved money by bundling his
policies. When his child became a teenage driver, boosting Armitage's auto insurance
rate, the agent switched both his homeowners and car insurance to the same company.
"It ended up costing me a couple hundred more on my
home insurance, but I'm saving $700 every six months on my auto insurance,"
Armitage says. "It just made business sense."
When separate still pays
Of course, there are disadvantages to bundling.
First, you'll face more work because you need to calculate your
total insurance costs. You may save money on your homeowners policy by buying
it from the company that also insures your car, but is that the best price you
can get on your car coverage?
In addition to looking at the numbers, you also need to compare
the policy fine print. Maybe your monthly premiums will go down, but will your
coverage also be less? Or perhaps your deductible will be higher, which could
cost you if you make a claim.
Your number comparison may reveal that insuring your home and
auto separately is actually more cost-effective. It's important to do the comparison.
And be careful when dealing with small, specialized companies.
"A smaller [home insurance] company that's under priced the
market may end up going out of business if they are in an earthquake area and
there's an earthquake," says Met-Life's Edsall. "You have to be sure
that a company can stand up to its obligations."
To check on the company itself, go to A.M.
Best, which evaluates insurance companies and can give you the low-down
on how fiscally sound an insurer is.
Most policy bundling occurs with homeowners and auto insurance.
It's much rarer to get a deal when you add life insurance to the mix.
A handful of companies offer all three, but be careful if you
do find such a bundling, says Laurence Ziff, managing director of insurance
at Cohn Wealth Management, a Roseland, N.J.-based division of the J.H. Cohn
LLP accounting and consulting firm.
"Life insurance is a specialty," says Ziff. "You
may find out that you can get a better deal by shopping around for a life insurer
rather than trying to buy life insurance from the same company that you buy
your car and home insurance from."
That said, consolidating your home and car insurance policies
could be worthwhile, as long as you do your research or hire an agent you trust
to do the legwork for you.
Jenny C. McCune is a contributing editor
based in Montana.
-- Posted: April 6, 2004