One of the ways insurance companies try to keep customers around is by offering perks to loyal customers. Loyalty discounts are usually the main perk, but others may include reduced deductibles. Often insurance customers believe that by looking for a new insurance policy they will wind up paying more since they’ll have to forfeit the loyalty discounts and perks they have earned. While it’s true that going to a new insurance company means losing loyalty perks, it doesn’t mean you’ll pay more for car insurance.
How Loyalty Discounts Work
Most insurance companies have some sort of program for rewarding loyal customers. There is usually a set amount of time after which you will have been with the company long enough to start getting a discount on your car insurance just for renewing repeatedly. Depending on the company, it might be just one discount that you keep as long as you are a customer, or you might see a discount that increases the longer you are with the company. These tiered discounts are a method of keeping you around for a longer time period because you can see a lower rate on the horizon.
The theory behind this type of discount is that you’ll want to stick around knowing you are getting lower rate in the future, and that if you leave you’ll have to give that up and start over. Loyalty discounts can definitely offer a benefit and mean lower rates, but it doesn’t mean that it’s the best rate you could be getting.
Does Shopping Around Affect Loyalty Discounts?
While you will lose your loyalty discount if you decide to change insurance companies, there is no risk whatsoever to taking some time to shop around and get quotes. Car insurance quotes come without obligation, so you can compare rates whenever you like. This will give you a better idea of how your current rate stacks up in comparison with what is out there.
You don’t have to switch unless you are sure it’s the right move, and until you actually cancel your loyalty discount is safe. The best way to comparison shop is to find out what future loyalty discounts await you if you stay, and how much you can expect to pay at that time. You will also need to know how long you have to stay with the company before the discount applies. Add up how much you’ll pay over that time period, and compare it to the quotes you have received. Taking a look at the long range difference in premium can make it much clearer how much you really stand to save with loyalty discounts versus a rate that might be lower right now.
Remember that although you might be giving up the loyalty discount you already have, if the rate somewhere else is lower, you will be saving more money down the road when loyalty discounts kick in on the new policy. So, if the rate is lower already, it stands to get even lower in the future. Ask what sort of loyalty discounts you can expect to get from a new insurance company in the future; this should be part of your decision process. Saving money today is a great place to start, but knowing you will save even more in the future can make the choice easier.
The future savings on your current policy are definitely something to consider and you won’t want to give up discounts you have already earned lightly. With insurance rates highly competitive and so many companies wanting your business – especially if you are a good driver who has earned many discounts including loyalty – it only makes sense to shop around occasionally and see what is available to you. Loyalty does matter when it comes to great rates, but don’t let the idea of being loyal to a company blind you to the possibility of saving a lot more elsewhere.
Shopping around for car insurance quotes regularly doesn’t affect any discounts you currently have, and it lets you keep an eye on the rates that are out there. You won’t know how much you could be saving if you don’t get quotes, so make it a regular habit to check up on insurance rates; if nothing else you can rest easy knowing you’re getting the best deal.