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Bundle and SaveInsurance companies have been rushing to the "Bundle and Save" marketing strategy.  They are offering consumers big discounts for insuring both their auto and home policies with the same company.  If you are the typical consumer you have to be asking yourself, "Why does it make such a big difference in my home insurance rate if I insure my car with you?"  Well, there are no economies of scale for the insurance company and they typically don't save a bunch of money on postage.  The real reason they want you to bundle your auto with our home has more to do with their bottom line.  You see, over the last decade insurance companies have literally made a science out of predicting auto insurance profitability. Using "Insurance Scores" in combination with typical underwriting data like your age, gender, driving record, territory and marital status they can accurately predict your likelihood of having an accident.  Which means they can predict their own profitability.

Homeowners insurance is not so predictable.  Especially with global warming fouling up our weather patterns.  Insurance companies are finding more and more difficult to predict profitability on home insurance so they are doing what they can to reduce their exposures to loss.  Recently, an article appeared in the Insurance Journal following the aftermath of Super Storm Sandy.  Many companies are cancelling customers on Long Island for no apparent reason.  This has been happening up and down the East Coast for quite some time.  It started in Florida and has moved up the coast.  Today, it is very difficult and expensive to find homeowners insurance for property near the coast.

To help offset the additional claims expense associated with the unpredictable losses in the homeowners market insruance companies are encouraging consumers to "Bundle" their policies.  Most companies do offer a discount to customers who bundle so there is a cost benefit.  Other companies will not even insure your home unless you also insure your cars with them as well.  Some insurance companies will consider other business in force when evaluation the renewal of a home insurance policy.  Especailly if there have been losses on that policy during the last few years. 

Whether you agree with the insurance companies reasons for encouraging the bundling of policies or not, it makes sense for consumers to bundle.  You save money and you will have greater peace of mind because you will be less likely to be cancelled if you have a loss.  In the future, you may not have a choice.  It could be that before an insurance company will even offer you homeowners insurance they will require that you insure your cars with them.  My advice is to not fight it, just "Bundle and Save" today and enjoy the lower premiums.
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