You'll save some premium dollars with a multi-vehicle discount. Yes, this is true. But while this is true, you might actually have been fooled to pay a lot more even with the "discount." Let's clear this up a bit...
A product that has a display price of $1,000 will go for $900 only if they offered you a 10% discount. But if another seller displays his product for $800, then even if you don't get a discount, you'd still pay less.
Don't expect an insurer to give you a cheap rate on your "B" simply because they did so for a "B" car. Here's why...
Insurance companies base their underwriting process on factors that will help them give you insurance, handle administrative costs and turn a profit. One very important factor is what is referred to as their claims history. For the purpose of this discourse, we'll define it as those who made claims within a profile for a given period.
It's possible that a company had a good experience with policyholders who have "A" cars. Let's say it also happened that at the same time, their "B" claims were higher than they projected. Such an insurance company could easily maintain their rates for "A" car owners while adjusting (upwards) rates for "B" car owners to reflect their loss history as a company.
What if another insurer did NOT have such an unpleasant experience with "B" cars? They'd likely have a lower rate. Therefore, it's suggested that you first get and compare quotes from other insurers before you can really settle for that multi-vehicle discount.
Don't forget: A discount only means they've lowered their own price. It does NOT suggest that they are offering the best rate out there.
And, if you count in each of the many factors, you'll see why you need to shop before you buy: Different insurance companies weight each of them differently based on their claims history, expertise and more. The end result is: Similar policies will have a big difference in rates.
So if you want to insure another car, do extensive comparison shopping. This will help you ensure that you'll really pay less with a multi-vehicle discount from your present insurer.
A product that has a display price of $1,000 will go for $900 only if they offered you a 10% discount. But if another seller displays his product for $800, then even if you don't get a discount, you'd still pay less.
Don't expect an insurer to give you a cheap rate on your "B" simply because they did so for a "B" car. Here's why...
Insurance companies base their underwriting process on factors that will help them give you insurance, handle administrative costs and turn a profit. One very important factor is what is referred to as their claims history. For the purpose of this discourse, we'll define it as those who made claims within a profile for a given period.
It's possible that a company had a good experience with policyholders who have "A" cars. Let's say it also happened that at the same time, their "B" claims were higher than they projected. Such an insurance company could easily maintain their rates for "A" car owners while adjusting (upwards) rates for "B" car owners to reflect their loss history as a company.
What if another insurer did NOT have such an unpleasant experience with "B" cars? They'd likely have a lower rate. Therefore, it's suggested that you first get and compare quotes from other insurers before you can really settle for that multi-vehicle discount.
Don't forget: A discount only means they've lowered their own price. It does NOT suggest that they are offering the best rate out there.
And, if you count in each of the many factors, you'll see why you need to shop before you buy: Different insurance companies weight each of them differently based on their claims history, expertise and more. The end result is: Similar policies will have a big difference in rates.
So if you want to insure another car, do extensive comparison shopping. This will help you ensure that you'll really pay less with a multi-vehicle discount from your present insurer.
About the Author:
Learn more at Really Cheap Auto Insurance and Cheap California Auto Insurance. Chimezirim Odimba writes on financial matters.
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