What is multiline insurance?

By Steven Merkel AAA
A:

The term "multiline insurance" can refer to multiline contracts and multiline insurers, so let's take a look at both variations.

A multiline contract is a type of insurance policy that bundles together exposures to risk and covers them under a single contract with a common aggregate deductible and policy limit. A common multiline contract combines property and casualty risks together into a single policy. A multiline contract is attractive because a common aggregate deductible can be offered on a policy portfolio that covers several risk types. Some insurance companies prefer this policy type because it allows them to reduce risk by spreading it among several factors, which helps them avoid a huge financial burden in the event of a catastrophe.

On the other end of the spectrum, a multiline insurer is an insurance company or independent agent that provides a one-stop shop for businesses or individuals seeking coverage for all of their insurance needs. For example, many large insurers offer individual policies for automobile, homeowner, long-term care, life and health insurance needs.

Holding multiple policies with the same insurer may trigger premium discounts for the insured and allow him or her to consolidate insurance policies with the same carrier. On the other hand, an insurance company that writes multiple insurance contracts on a customer garners more premium profits and improves client retention by keeping competitors away.

For more on this topic, read Insurance 101.

This question was answered by Steven Merkel.

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