HCF launches home and car insurance – is bundling insurance work it?

With every insurance company offering every product under the sun, is it worth bundling your cover? Or nah?

If variety is the spice of life, then insurance companies are cooking up some incredible jerk chicken.

In March, Ferrari launched car insurance for Aussie drivers of the Italian sports cars.

Then the German supermarket ALDI came to market with white label insurance from Honey.

And now, the home-grown not-for-profit health fund HCF has expanded into 2 new insurance categories, home and car, underwritten by Allianz.

But when it comes to insurance, does variety make life better? Or is having multiple insurance providers a recipe for an expensive headache?

What is bundled insurance?

A 'bundle' can refer to a lot of things, from babies to winter coats. For marketers, it refers to a combination of a few products from a single provider. Phone and internet providers are the classic example.

Insurance companies will generally talk about bundles as 'member rewards' or a formal 'multi-policy discount'. Of course the whole point of bundling is the promise of a saving of time or money:

• Bundles save time by reducing admin - one company, one call.
• Bundles save money by getting a small discount off your bill.

But how big is that saving?

How much can multi-policy discounts save you?

Bundled insurance discounts vary from company to company. Mostly you'll see discounts advertised for general insurance products, including car, home and pet.

A couple of examples of these discounts include:

• GIO: Combine 3 or more eligible policies with GIO to get 10% off.
• APIA: Combine 2 or more eligible policies to get 10% off each.
• NRMA: A slight confusing sliding scale of up to 15% off (but only with 10+ policies!).

HCF is a good example of a slightly different discount model. Being a health insurer first, members with hospital or extras cover will get a discount on other HCF products. At the time of writing these discount are:

• 25% off HCF travel insurance
• 15% off Flip injury insurance
• 15% off HCF pet insurance
• Up to $150 bonus gift-card when you sign up to HCF car insurance
• Up to $150 bonus gift-card when you sign up to HCF home insurance

Health funds are fairly restricted in what discounts they can offer on health insurance policies themselves, so this approach gives them the ability to offer discounts elsewhere.

Bundles vs loyalty discounts

A related form of discount can be found in formal loyalty bonuses. NRMA is an old-school example, offering a formal loyalty discount based on the number of years you've been a member.

Health funds sometimes use a different model, where the number of years you're a member upgrades your status. Higher status gives you access to a bigger set of rewards, rather than a blanket discount on your policy.

Despite the fancy marketing, we generally find that insurance loyalty doesn't pay. In fact, more Aussies probably pay a loyalty tax by not shopping around for their insurance than save money because of a loyalty bonus.

Is it worth bundling insurance products?

Similar to loyalty discounts, bundles do offer a genuine saving on your premiums, but there may be bigger savings to be had by shopping around.

Comparing insurance each year makes sure you're covered for what you need and for nothing you don't, but it also gives you access to sign-up discounts from other providers. These can be very generous, often worth up to 15-20% of the first year of premiums.

Of course, comparing does take time and work, even with a comparison site like Finder doing a lot of the heavy lifting for you. So bundling does offer some genuine value, in the form of convenience.

Keep in mind you can always use Finder to compare what policies are on the market, then use some alternate quotes to negotiate with you current insurance provider.

No matter what approach you take, you'll have to figure out which is the best option for you.