Is Auto Insurance Cheaper If You’re a Homeowner?
Auto insurance may be cheaper if you're a homeowner, but it depends on your insurance company and your driving record. Homeowners with good credit and a good driving record can save anywhere from 5 to 20 percent on their auto insurance premiums. Car insurance can be also cheaper if you're a homeowner who bundles their insurance policies together with the same company. If you're looking for cheaper car insurance rates, enter your ZIP code into our free comparison tool below to start comparing auto insurance quotes near you.
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UPDATED: Mar 30, 2021
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You may have heard people say that auto insurance is cheaper if you’re a homeowner. This can be true for some policyholders but not others.
One of the best ways to save money on insurance is to bundle policies together. The same companies that sell car insurance often sell home insurance. By bundling your auto and home insurance policies with the same company, you can save money on both policies.
There are also other reasons why car insurance tends to be cheaper if you’re a homeowner. Car insurance companies check your credit score before giving you a policy. Someone who owns a home may have a stronger credit score – and better overall finances – than someone who does not own a home. This is particularly true for homeowners who have paid off their mortgage.
However, buying a home doesn’t automatically reduce the price of car insurance. Some homeowners get no discount whatsoever. Having a large mortgage and other debts can drag down your credit score. Buying a home in a rough neighborhood can cause car insurance rates to skyrocket. For some homeowners, car insurance will not be cheaper.
Pros and Cons of Bundling Insurance Policies
Homeowners can save money on car insurance by bundling their auto and home insurance policies with the same provider. Thanks to bundling, you can save anywhere from 5% to 25% on each policy.
Some of the pros and cons of bundling insurance policies include:
- Save 5% to 25% on insurance premiums on each policy after bundling
- You don’t have to deal with multiple insurance companies, multiple billing systems, and multiple accounts; you can manage all your major insurance policies from a single dashboard
- If you have a history of car accidents or costly claims, then bundling your car insurance with your home insurance can make it less likely your insurance company will drop you
- Bundling savings can be even higher for those with multiple vehicles, multiple homes, or a spouse
- Policyholders can get complacent with a bundled policy; someone with separate insurance policies might frequently shop around, while someone with a bundled policy might not notice small rate changes within individual premiums because they’re paying a simple all-inclusive monthly rate
- Bundling isn’t guaranteed to be cheaper; sometimes, you’re better off buying individual home and auto insurance policies
- Some car insurance companies advertise ‘bundling’ savings, but rely on third-party providers for home insurance; this takes away the customer’s ability to choose their home insurance provider, and it may also force you to deal with multiple insurance companies in the event of a claim
- Owners of high-end vehicles may find they don’t save much money by bundling
- Bundling can reduce the individual coverage limits of your insurance policy
Ultimately, homeowners can typically save a lot of money by bundling car insurance with home insurance. Savings aren’t guaranteed, and it’s easy to get complacent with a bundled policy. For many homeowners, however, bundling is an effective way to save money.
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Other Reasons Homeowners Pay Less for Car Insurance
Homeowners may be able to save money on car insurance because of bundling. However, there are other reasons why a homeowner may be able to pay less for car insurance, including:
Better Credit and Overall Financial Health
Someone who owns a home free and clear may have a better financial picture than someone paying off a mortgage or renting. Generally, homeowners tend to have a better credit score than renters (although there are always exceptions). Car insurance companies check your credit score before assigning you a policy. Someone with a higher credit score is going to pay lower insurance premiums than someone with a lower credit score, all other things being equal.
Better or Safer Neighborhood
Homeowners who buy a house in a safe neighborhood will pay cheaper rates than those living in ‘rough’ neighborhoods, all other things being equal. Your ZIP code plays a huge role in your car insurance premiums. Some ZIP codes are associated with more accident claims than other ZIP codes. Other ZIP codes have high rates of vehicle theft or vehicle break-ins. Your insurance company doesn’t care whether you own or rent, however, when checking your ZIP code.
Auto insurance can be cheaper for homeowners – but that’s not always the case.
Homeowners may be able to save 5% to 25% by bundling a car insurance policy with their home insurance policy. Homeowners may also have a better credit score or better overall financial picture than a non-homeowner – particularly if they own their home free and clear.
This isn’t the case for all homeowners, of course. We recommend comparing insurance prices online today to ensure you get an insurance policy that matches your budget and needs.