Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 4 minutes
Ask other business owners what they think about combining insurance policies, and most of them will tell you it’s the smart move because combining always saves money. It’s become such a common belief that plenty of businesses barely look at standalone options anymore.
Combining could absolutely save money. But sometimes it hides higher costs.
The real question is, “Is combining cheaper for you?”
Why Do People Combine to Begin With?
People like things simple. When they hear of an opportunity to have one combined policy that saves them time on shopping for individual coverages, they jump at the chance! Less time shopping around? That’s a win for sure.
It’s also a plus to deal with one agent for multiple coverages. When there’s only one agent you interact with, you know who your point of contact is and where to go when you have questions.
There’s also an opportunity to streamline claims. If you have multiple policies with the same carrier, then reporting could be simpler (one point of contact), but the carrier may still open separate claim files/adjusters and request line-specific documentation—but the claim may still be split into separate claim files/adjusters depending on the coverages.
But aside from these perks, we all know the real lure. It’s the cost-saving opportunities presented by the carrier. Many carriers offer discounts if you combine multiple coverages. A popular example is the tandem of General Liability and commercial auto coverage. Some insurance carriers offer multi-policy discounts when commercial auto is combined with general liability, but savings could vary widely based on insurer, state, industry/classification, limits, deductibles, and coverage form choices (for example, claims-made vs. occurrence for liability).
But other times it doesn’t save much of anything, and gets policyholders locked into a company they no longer want to work with.
Could You Save Money by Just Combining?
Combining became popular because it’s convenient. It’s also familiar. Most people are familiar with combining to save at fast food restaurants. Combo meals are often marketed as cheaper than buying items separately, so combining insurance could feel like the same idea, you know, the one.
But combining won’t always save you cash.
It’s common for busy business owners to renew with limited re-quoting, so it could be smart to periodically compare standalone and bundled quotes.
Let’s pretend that a restaurant owner is currently paying:
- $4,000 for general liability
- $3,500 for workers comp
- $2,000 for commercial auto
But what if:
- The general liability price was high to begin with
- The auto coverage wasn’t competitively priced?
The discount you get by combining your business insurance actually obscures higher costs with a sleight of hand. Let’s be real:
- If a carrier applies a package credit/multi-policy discount, it could offset increases in one line—but you should still review your policy payroll/class codes for accuracy
- Property insurance inside a bundle may be quietly creeping up
- Having one broker/agent (or fewer carriers) could make it easier to request certificates of insurance (COIs). However, a COI is informational and does not amend or expand coverage. If a contract requires you to be named as an additional insured, that status must be granted by the policy’s additional insured provisions and/or an endorsement—not simply by listing a party on a certificate.
How To Know If That Bundle is Actually Saving You Money
To know whether the bundle is competitively priced, you typically need a market check, either by obtaining comparable quotes, having your broker shop multiple carriers, or benchmarking against similar accounts.
Make sure you gather detailed information on your current separate policies. You should note all your coverage limits and premiums. Once you have a baseline, you can actually compare.
Once you have that baseline, see how much individual policies (from multiple carriers) should cost you compared to combining everything with one carrier. Try at least three different insurers if you can. See what each carrier offers individually, as well as what bundles they bring to the table.
Once you’ve looked around, make sure you compare apples to apples. Make sure you compare quotes with identical coverage limits, deductibles, and optional coverages. Optional coverages vary by type of business, hired and non-owned coverage for auto, equipment breakdown for property/BOP, employment practices endorsements, cyber add-ons, etc.
Finally, make sure you do some digging into who you are working with. It’s not hard to find information about insurance companies online. If a company with a poor reputation is offering big savings on a bundle, it’s better to shop around before going all in with that carrier.
