Allstate's new script: The bundle ultimatum

By Aaron Crowe Posted : 12/01/2011

risk profit lossMany insurance companies offer savings to people who buy multiple policies. Typically, this type of bundling is optional for the customer.  In North Carolina, Allstate Insurance is taking a different approach by making bundling mandatory for some policyholders.

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Allstate this year adopted new underwriting guidelines that link homeowners insurance policies with auto insurance policies for North Carolina residents. So, Allstate customers will have their homeowners policies dropped if they don't add the company's car insurance.

Allstate told approximately 45,000 affected customers who have homeowners insurance only that it won't renew their policies unless they add auto insurance.

Allstate doesn't have plans to expand the bundling  policy to any other state, says spokesman Tracy Owens.

"We're trying to responsibly manage our risk," Owens says.

Owens said the decision had nothing to do with Hurricane Irene, which in August battered the East Coast from South Carolina to Maine.

Customers with homeowners policies were notified last year that they had until Dec. 15, 2011, to bundle their policies.

Owens says that to date, the company no customers affected by the policy change have dropped  their coverage because they're now required to buy car insurance through Allstate.

Allstate made the change so it can stay in business in North Carolina and spread out its risk better, Owens says. "We want to remain a viable company," he says.

Allstate customers who have auto insurance only aren't required to get homeowners insurance if they own a home, he says.

Study: majority bundle home and auto insurance

Bundling can typically save you up to 30 percent on insurance premiums, and 58 percent of customers bundle their home and auto policies, according to the J.D. Power and Associates 2011 U.S. National Auto Insurance Study.

Nationwide Mutual Insurance Co. doesn't require bundling in North Carolina -- or anywhere else, says spokeswoman Elizabeth Stelzer. Nationwide is among the top home and auto insurers in North Carolina, with 665,000 car insurance policies and 345,000 homeowners insurance policies.

USAA, which caters to the many military families in North Carolina, also doesn't require bundling anywhere, a spokeswoman said. And like most insurers, it offers a discount to policyholders who have both their home and autos covered by USAA.

Another insurer in the state, North Carolina Farm Bureau, is adopting underwriting policies similar to those of Allstate next year, according to a Charlotte Observer story. Farm Bureau representatives didn't return calls from Insurance.com. The group's executive vice president told the Observer that the decision to link car insurance with homeowners insurance was a business decision and that the company was lucky to break even in a good year on homeowners insurance.


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