Insurance is necessary to protect you from financial ruin, but it can be expensive. If you own a home and a vehicle, you might be able to save a substantial amount of money by bundling your policies with one carrier. Many insurance companies offer discounts of 20 percent or more to customers who purchase both auto and homeowners policies. Savings depend on the company and the location. In some circumstances, however, bundling is not the best move.

How Bundling Policies Could Save You Money
In addition to saving on your monthly premiums, bundling insurance policies could save you money if you needed to file an insurance claim. For example, if an event occurred that damaged both your home and your car, having bundled policies with one company might allow you to file one claim and pay one deductible, rather than filing two separate claims with different companies and paying two deductibles.

If your circumstances make you a high risk in the eyes of an insurance company, your coverage could be dropped. For example, if you have a house in an area that is prone to natural disasters or a poor driving record, the company might decide that the potential cost of a claim is too high to justify keeping you as a customer. If the company dropped your coverage, you would have to go elsewhere and might have to pay higher premiums. If you bundled multiple policies with the first company, it would be less likely to drop you because you could decide to purchase all your policies from another company, causing the first company to lose all the premiums you were paying.

Reasons Not to Bundle Coverage
Sometimes it makes more financial sense to get auto and homeowners insurance from different carriers. If you have a luxury or performance car, a standard auto insurance company would likely charge exorbitant premiums or deny coverage altogether. In that case, you would need to get car insurance from a company that specialized in high-end vehicles, but you could get homeowners insurance from a standard carrier.

Bundling insurance policies could save you money now, but it might cost you more later. A company might offer you insurance with less coverage at lower rates, but you could pay a higher deductible, or a policy might not cover certain types of damage, leaving you on the hook for repairs. If you bundled your policies with one company to get a good deal, the carrier could gradually raise your premiums until you wound up paying more than you would have with another company.

Shop Around and Compare Costs
Insuring your home and car can be expensive, but you may be able to save a significant amount by bundling policies. Compare rates and options with various companies to figure out which carrier and combination of coverages would be best for your unique circumstances. Periodically review your coverage to see if you could get a better deal by switching companies.