What Is Multiline Insurance?

A multiline insurance contract is a type of insurance policy that bundles different exposures to risk and covers them under a single contract. These policies provide additional income for the providers, while simultaneously offering increased convenience and premium discounts to policyholders. The practice of bundling has become widespread in recent years. Case in point: nearly 80% of customers bundle multiple policies with insurers.

Key Takeaways

  • A multiline insurance contract describes a policy that bundles different areas of coverage.
  • For personal insurance, a bundled policy may include car, home, and life insurance coverage.
  • For commercial insurance, a bundled policy may cover loss of life, as well as physical and intellectual property theft.
  • Customers benefit from bundled policies because they offer discounts while streamlining customer service.
  • Companies benefit from offering bundled policies because it mitigates potential payouts.

Understanding Multiline Insurance

For the insured individuals, multiline contracts are attractive options, because these policies aggregate deductibles, in order to cover several risk types. These offerings likewise benefit providers because they reduce exposure by spreading the risk across a swath of different factors. This serves to minimize the financial burden if catastrophic events occur.

Bundling in Practice

A multiline insurer is effectively a one-stop shop for businesses and individuals. Consider the following:

  • Personal insurance. Many large insurers offer individual policies for automobile, homeowner, long-term care, life, and health insurance coverage.
  • Commercial insurance. Multiline insurers may cover risks such as loss of life, as well as physical and intellectual property theft.

The Advantages for the Insurers

Bundling lets insurance companies maximize their offerings, which improves client retention by reducing the contact customers may cultivate with competitors. Furthermore, by obtaining a more detailed picture of their clients' overall coverage needs, insurers can glean a clearer idea of the kinds of risks they represent. This helps companies ensure they'll have sufficient reserve capital to cover payouts they may ultimately be responsible for making.

Advantages for the Insured

According to a 2017 survey by InsuranceQuotes, insurance bundling saves policyholders an average savings of 16%, although the amount saved varies from state to state, due to differing regional costs. For example, while policyholders nationwide annually save an average of $600 by bundling home and auto insurance, residents in the state of Vermont on average would only save $175.

In addition to enjoying discounts, bundled policyholders also report cleaner customer service experiences. Not only do clients receive just one bill consolidating expenses for all areas of coverage, but each customer is represented by a single point of contact.

On the downside, a bundled policyholder may be agreeing to coverage in an area that a given company may not specialize in. Let's assume a particular company excels in providing automobile coverage, while homeowners' insurance represents its secondary product line. In such cases, a bundled policyholder may have a more efficient experience making a claim after a car accident, than he or she might have after reporting a home burglary.

Bundled policies reduce paperwork while saving policyholders from the hassle of memorizing multiple usernames and passwords.