It seems insurance premiums always continue to creep up no matter if you’ve had a recent claim or not. But if you’re like many of us, you can’t help but think there has to be a way to save money on insurance.
The external factors that could contribute to the rise are not only too complex for the average insurance customer to understand, but in many cases totally out of their control — but there’s hope.
Want to save money on insurance? Try bundling
The study uses a hypothetical consumer — a 45-year-old married woman who lives in the South — to show how combining premiums into one package can yield big savings.
In the example listed in the study, the insurance customer mentioned above is from Mississippi and has a bachelor’s degree, no coverage lapses and top-notch credit. By combining her auto and homeowners insurance, she can expect to save an average of 23% on her annual premium, the study shows.
Of course, what you save personally will vary depending on these factors:
- Where you live
- Your credit history
- Accidents and other factors
According to the study, the average discount for bundling home and auto is at 16%, while bundling auto and renters insurance will save about 8% on an annual premium. On the other hand, one person may be able to cut their insurance premium in half while the other may only see little savings.
The real reason bundling your premiums saves you money on insurance
Why would bundling your insurance be cheaper? If you think insurance companies are doing this because they’re looking out for you, think again. They’re doing it because it’s a tried-and-true tactic to keep customers.
“This all comes down to competition,” Tennessee-based insurance broker John Hatcher says. “There are so many companies out there that can offer lower rates that it’s become harder to keep customers long-term. But the more policies you have with one insurer the longer you are likely going to stay with that company.”
States in the South offer the biggest savings, according to the study, with Louisiana (where customers can save a whopping average of $590 a year on average) being #1.
Here are the states with the largest percentage premium discounts on average due to bundling home and auto insurance.
- Mississippi — 23.2% discount
- Arkansas — 22.6% discount
- Missouri — 22.5% discount
- Illinois — 22.5% discount
- Minnesota — 22.4% discount
And here are the five states with the smallest percentage premium discounts on average due to bundling home and auto insurance:
- Florida — 6.7% discount
- Hawaii — 10.6% discount
- New York — 11.5% discount
- Vermont — 11.6% discount
- Connecticut — 12.1% discount
More than anything, do your homework before choosing a company to handle your auto and home insurance. When you compare rates, you may find that you can save hundreds of dollars a year.
Here are some more articles you might enjoy from Clark.com:
Don’t overpay for homeowners insurance
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