How to save on a car and home insurance package
Don’t pay too much for your car and home insurance
If you own a car and a home, you’re already paying for two separate insurance policies—probably with two different companies. These rewards can add up quickly.
Fortunately, there is an easy way to reduce insurance costs. By bundling your car and home insurance with the same company, you can potentially lower your rates by as much as 25 percent. That could put a lot of money back in your pocket every month.
If you’re not already bundling your car and home insurance, here’s what you should know.
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Car and home insurance package: how does it work?
Bundling your car and home insurance (or car and renters insurance) together is one of the easiest ways to save money every month. This involves purchasing multiple insurance policies from the same company, which can help reduce your premiums by up to 25 percent.
Having more than one policy with the same insurer indicates loyalty, and insurance companies often reward customers for their loyalty.
Not only can you save money, but bundling simplifies your finances by working with a single insurance company for multiple policies.
But while bundling has its perks, insurance premiums can increase each year. Because of this, it’s smart to shop around regularly and compare packages with other companies.
Who has the best car and home insurance package?
While many auto and home insurance companies offer bundles, no single insurer is best. A study found that State Farm, Allstate, and USAA tend to offer the largest bundle discounts. However, since your premium is affected by various factors, all you can do is shop around to find the best rate.
Factors affecting your insurance premiums
Your level of risk — and the projected cost of repairing or replacing your car — will ultimately determine your auto insurance premium. For example, premiums are higher for newer and luxury cars. Likewise, younger drivers tend to pay more for auto insurance than older drivers.
In addition, some states charge higher premiums for male drivers. And you may pay more for auto insurance if you live in a high-crime area.
Things that can affect your insurance premium include:
- driving history
- Insurance/claims history
- The type of car
- vehicle ownership status
The same general principle applies to home insurance: the more vulnerable your home is to disasters like fire and flood, the higher the cost of insurance.
Insurance providers take these factors into account when evaluating customers. The less risky your classification, the less you’ll pay for your can and homeowners insurance.
What if I already have car and home insurance with different companies?
It is quite possible that you already have several insurance policies with different providers. You may be wondering: Can I switch mid-policy and bundle with another company?
The short answer is yes. Whether you have auto, home, or renters insurance, you don’t have to wait for your policy to expire to get a new one.
But while you can switch at any time, canceling insurance during the policy period may result in a penalty or fee. This fee is typically 10% of your remaining premium, although some companies do not charge a cancellation fee.
Cancellation of insurance during policy may result in a penalty or fee. To avoid a penalty, buy auto and home insurance packages if at least one of your policies is up for renewal.
To avoid a penalty, buy auto and home insurance packages if at least one of your policies is up for renewal. Policies typically renew every six months or once a year and you will receive a renewal letter in advance from your insurance provider. This gives you time to look around and compare prices.
To compare rates, contact your current provider and request a rate quote for bundling your car and home insurance (or any other policy). Also, contact some other providers for free quotes.
Once you have your new policy, contact your previous insurer and cancel your old policy. The cancellation process is different. Some companies allow cancellations over the phone, while others require a fax or mail cancellation form.
More ways to save on car insurance
The average cost of comprehensive car insurance is over $1,000 per year on average. These policies offer different types of protection, for example:
- Third Party Liability: Covers damage you cause to another driver’s car
- Collision: Covers damage to your own car
- Comprehensive: Covers non-accidental damage to your car
Your specific coverage levels, driver history, and vehicle will determine your auto insurance rate. Even so, there are steps you can take to lower your premium.
1. shopping spree
Car insurance rates (as well as home insurance rates) vary from provider to provider. It is therefore important to shop around and compare premiums from different insurers. Ideally, you should obtain at least three installment quotes.
It is estimated that the price shopping saves customers hundreds of dollars every year – and the savings could be even greater if you have bad credit or an imperfect driver’s license, in which case the difference in rates can be more extreme.
When shopping, make sure each of your auto insurance quotes includes the same types and levels of coverage, as well as the same deductible. This way you get the most accurate head-to-head comparison so you know which company is really the cheapest.
2. Ask about discounts
Insurance discounts also vary from company to company, so be sure to ask your agent about their specific offers. To save money, take advantage of as many discounts as possible.
Discounts you may not know about include:
- Low kilometer discount: If you drive fewer than a certain number of miles per year (often 7,500 to 12,000), your provider may discount your car insurance premium. This discount could lower your insurance rate by up to 30%
- Discount for good drivers: You may get a discount (up to 20%) if it’s been more than three years since your last accident, speeding ticket or other traffic violation
- Discount for defensive drivers: Most insurance companies give discounts when a driver takes a defensive driving class. This discount can range from 5% to 10%
- Military and federal worker discount: If you’re a military or federal employee, you may be eligible for insurance savings of up to 15% or more
- Discount for theft: Installing security devices such as an alarm, steering wheel lock and brake locks reduces the likelihood of theft and can save you up to 15% per year
- Good student discount: Younger drivers tend to pay higher car insurance rates. However, some providers offer good student discounts. This is available to high school and college students (ages 16-24) with a GPA of 3.0 or higher. You can save about 10% to 15% of your premium
3. Increase your deductible
Your insurance deductible is what you pay out of pocket before your insurer pays out a claim. Average deductibles can range from $500 to $1,000. In general, the lower your deductible, the higher your insurance premium. Therefore, increasing your deductible can significantly reduce your monthly insurance payment.
4. Maintain good credit
A good credit rating is not only an advantage when applying for a loan. It can also lead to lower insurance premiums. Pay your bills on time, dispute credit report errors, and pay off credit card balances to improve your credit score and lower your auto and home insurance rates.
your next steps
By bundling auto and home insurance, you can, well, save a bundle. So it pays to shop around and see which companies are offering the biggest bundle discounts.
If you are preparing to buy a home, now is the perfect time to compare insurers. You may find a good deal by bundling it with your current auto insurance company. Or you can save more by choosing a homeowners insurance company with a lower rate and moving your auto policy to that provider.
Remember that you can cancel insurance at any time and if you find a better deal it’s often worth it.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for the products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policies or position of Full Beaker, its officers, parent companies or affiliates.