Depending on the types of coverage you purchase, there are several reasons
why you may want to consider purchasing your policies from one carrier.
When weighed against the negative aspects of consolidating your coverages, usually
the positives win out. Each situation is different, however, so here are
some bullet points to consider both for and against the notion of consolidation:
- Cost benefits – Often, though
not always, you can achieve cost benefits in consolidating coverage with one
carrier. Deals vary from company to company, but it is not unusual to
achieve cost savings of as much as 15% or more by carrying your homeowners and
auto with the same carrier. Another thing to consider is the breadth of
product lines available from many insurance companies these days. While
specialist companies still exist, many insurers offer a dizzying array of financial
and insurance products for every aspect of your business and personal lives.
Check to see what other products your current carrier offers, and see if there
are any deals they might be willing to cut if you buy other products from them.
It becomes a win-win as the company reduces its marketing costs, and gains customer
loyalty, and if they are willing to pass on some of those savings, you stand
to benefit nicely as well.
- Reducing coverage gaps – Though
largely dependent on the type of coverage purchased, consolidating your insurance
portfolio can reduce certain coverage gaps. A prime example would be the
purchase of General and Professional liability with the same carrier.
While for some professions the benefits may be minimal, for others it could
be extremely beneficial. Take, for example, accountants and travel agents.
For an accountant, there is little likelihood that their professional services
could lead to bodily injury or property damage. A travel agent,
on the other hand, often makes recommendations with possible physical repercussions.
If the agent recommends a resort that is, unbeknownst to him or her, undergoing
renovations, and a slip and fall occurs due to the unsafe conditions, it is
likely that the lawsuit will include the travel agent who, after all, recommended
the resort and should have known about the condition the resort was in.
Since a slip and fall is a common General Liability claim scenario, and a Professional
Liability policy usually does not include coverage for Bodily Injury or Property
Damage, you may find two carriers pointing a finger at one another and disclaiming
coverage. With both coverages in the same house, so to speak, this concern
evaporates as it is clearly going to be handled by the one carrier under one
or both policies. In fact, many carriers offer this type of coverage under
a single policy or in a single program, further eliminating any confusion.
- Tailored coverage – Sometimes,
as alluded to above, carriers anticipate the problems of coverage gaps and create
tailored solutions under a single “package” policy, or in a program offering
different coverages that are created to dovetail with one another without duplicating
coverage unnecessarily, and without creating dangerous coverage gaps.
In addition to the professional and general liability scenario described above,
umbrella policies often work best when written by the same carrier as the primary
coverages. Since the umbrella underwriter will be familiar with the underlying
coverages, they will have no problem tailoring the policy to the needs of the
While considering all the costs and benefits of consolidating coverage, it
is important to be aware of the financial strength of the insurer you select.
Cost benefits may be outweighed by the greater risk of going with a company
that is poorly rated by A.M. Best or any of the other rating services that monitor
insurers. You may also find that insurers change their appetite for a
product or products in midstream, leaving you to replace not just one, but several
policies at the same time, so be sure to look at the carrier’s track record.
Are they market timers, in for a quick buck, or do they tend to stick around
through good times and bad?
It is also possible to lose sight of some of the coverage benefits that are
available through one of the specialists in any given line of coverage, but
not readily available through the generalist. More often than not, though,
consolidating coverage with the right carrier will create a win-win scenario