Loyal Customer Auto Insurance Discount: What You Need To Know

March 4, 2020

Car insurance can be expensive, but there are ways to cut down your monthly premium with discounts. The best car insurance companies will offer a variety of discounts from being a good student, to driving safely, military service and much more. Your auto insurance company wants to keep you, so they will offer discounts to ensure you stay.

Many auto insurance companies offer customer loyalty discounts to reward those who have stuck with their company year in and year out. Just how much you’ll save with this discount varies from company to company. Depending on your company, the discount can even grow the longer you’ve been a customer.

While this may seem good for the insurance company, it may not be good for you. Let’s look at the pros and cons of loyalty in car insurance.

Who offers loyalty discounts?

Which discounts that are available to you depend on state and insurer specific guidelines. For example, the “homeowners insurance discount” does not exist in California because the state does not allow homeowner status to be used as a rating factor. Ohio and Maryland do not allow insurance companies to use customer loyalty as a rating factor. Some don’t even offer discounts, because they don’t want to.

Staying with an insurer just because they offer you a loyalty discount isn’t a good idea. However, these insurers do offer loyalty discounts:

  • Farmers
  • Nationwide
  • Allstate
  • USAA

How much are the savings with the loyalty discount?

Not much, actually – due to price optimization. The insurance company gathers all kinds of data about your spending habits. Then they use that information to determine how sensitive you’d be to a rate hike, down to the amount they can charge you without tempting you to shop around for lower rates.

For example, your rate may increase 25%, but then they will offer you a 10% loyalty discount. You’re still paying more even though you thought you were getting a deal. And you stick around.

So even though you have a clean driving record, you’re paying more than a similar customer whose data shows they are more likely to leave it the company raises their rates. So, in all reality – you’re not even being rewards for being loyal.

Why you should shop for new car insurance

So, while you think you’re getting a great deal – you’re actually paying more. That’s why the best thing you can do shop around for new car insurance about twice a year. Every company has its own individual pricing approach, and your rate will vary from company to company. However, staying with a company just because they offer you a customer loyalty discount isn’t saving you money.

When it comes to car insurance, you want a company that is reliable and offers great service in the circumstance that you file a claim. Another big component to choosing the right company is one that will honor certain discounts to lower your premium. If you’re a good driver, a good student, involved in the military, or multi-bundle, use our quote tool below to make sure you’re getting the best price for your auto insurance.

Quick Money Savings Tip For Safe Drivers

There are dozens of auto insurers – Which one will give you the best rate?

Step 1) Choose your vehicle make below.
Step 2) On the next page, complete the 4 minute questionnaire, and you'll have the opportunity compare the best rates in your area.
Step 3) Keep more money and possibly save hundreds!

1 Choose a make for potential car insurance discounts:

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