How to Get a Loyalty Discount on Your Auto Insurance

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Loyalty discount: family happily riding a car

Customer loyalty programs have been around for decades. The premise is simple: offer discounts to loyal customers, and companies can overcome competition, boost brand loyalty, ensure repeat customers, and even entice new customers.

The idea of a loyalty discount is much the same for the car insurance industry. Provide a lower rate for customers that continue to use a company’s service, and they’re likely to build loyalty with the company. It’s a synergistic relationship that provides benefits for both sides.

The only problem is that every company has different qualifications, discount amounts, and fine print that the average car insurance customer may not know about. If you’re interested in the savings that a loyalty discount can provide, use this guide to answer some of the most common questions and learn which companies offer a loyalty discount.

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What Is a Loyalty Discount for Car Insurance?

A loyalty discount for car insurance is a type of reward program that provides customers with a discount on their car insurance premium for staying with a single insurance provider for a certain period of time — usually two years or more.

Some companies also consider multi-car or multi-policy (bundling auto insurance with another insurance product) discounts as part of their loyalty discount programs. In addition, insurers may offer a paid-on-time or paid-in-full discount if you don’t miss a payment or pay the full amount upfront.

The insurance company may include any of these loyalty discounts automatically; other times, the customer must request them.

As mentioned before, the idea behind monetary loyalty program incentives is to retain existing customers, build positive customer relationships, and prevent a customer from moving to a competitor. Customer retention is an integral metric in most companies, which provides a measure of brand loyalty or if a company needs to retool certain operations or marketing strategies.

How Do I Qualify for a Loyalty Discount?

Woman holding a card

Like almost every type of car insurance discount, each auto insurer has its own set of qualifications for a loyalty discount. The good news is that almost every company offers it as a way to get repeat business, influence purchase decisions, or grow/retain their customer base.

To qualify for a loyalty discount, you usually have to stay with the auto insurer for a set amount of years. However, some insurers have started to offer annual loyalty discounts as one of the perks of doing business with them.

How Much Money Can I Save With a Loyalty Discount on Auto Insurance?

Depending on your insurer, you can save up to 20% on your annual or semi-annual car insurance premium. But again, this all depends on your car insurance provider. In general, you should expect somewhere in the 10% to 20% range.

The national average for car insurance premiums is $166 per month or $1,992 per year. If you factor in the 10% to 20% savings from a loyalty program, you can save between $192 and $398 per year. That’s not too shabby, considering you really don’t have to do anything besides stick with the same insurance company.

Loyalty Discounts and Savings by Company

If you’re considering a new car insurance company or you plan on staying with a car insurance company for the foreseeable future, searching for loyalty discounts is always a smart idea. Here are some of the loyalty discounts and savings rates offered by some of the largest car insurance providers around the country:

  • Progressive: Average savings of 5% for bundling or 12% for multi-car policies; Progressive also offers accident forgiveness coverage for customers who have stayed with the company for five years or more.
  • State Farm: Average savings of 20% for multiple policies or 17% for multi-car policies; State Farm may also offer a renewal discount if you maintain an accident-free record.
  • Allstate: Has an automatic 10% discount on car insurance for renewing at the end of the year; Allstate also has savings of up to 25% for bundling multiple insurance products.
  • GEICO: Includes savings of up to 25% for a multi-car policy; GEICO may also offer variable savings for multi-policy discounts depending on state of residence and the products selected.
  • Liberty Mutual: Offers multi-car, multi-policy, and early shopper (buying your insurance before your policy is near expiration) discounts that vary by state of residence.
  • Farmers: Provides variable savings for staying a customer for more than a year, as well as multi-car and multi-policy discounts.
  • Travelers: Includes savings of up to 13% for multi-policy discounts and variable savings for multi-car and continuous coverage discounts.
  • Nationwide: Offers savings of 5% if you stay with the company for three years and 15% if you’re with them for five years; Nationwide also has discounts for multi-car and multi-policy customers with a variable savings rate.
  • MetLife: Gives both multi-car and multi-policy discounts depending on the products and where you live.

This is just a short list of the companies that offer loyalty discounts to enhance the customer experience. If you’re satisfied with your current coverage, make sure that you inquire about loyalty discounts that can save you money on your next purchase.

Do Loyalty Discounts Always Give You the Best Rate?

Although loyalty discounts may seem like they’re saving you money, that’s not always the case. Insurance companies have been noted for increasing your premium while offering the discount, which results in zero savings. In this instance, a loyalty discount is more of a marketing gimmick rather than a special offer for existing customers.

This is also known as price optimization. Due to machine learning, advanced metrics, and the abundance of data, car insurance companies essentially understand exactly how much you’re willing to pay for a policy. When they add a loyalty discount and increase your rate but still stay below the price optimization threshold, they assume you’ll buy without a second thought.

That’s why it’s important to always look at multiple options when you’re renewing a car insurance policy.

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How Can I Maximize Savings on Top of a Loyalty Discount?

Man driving a convertible car

Beyond loyalty discounts, insurers offer plenty of other incentives that can give you cash back for first-time or repeat purchases. Don’t rely solely on loyalty discounts as your only form of savings. Instead, explore other discount programs commonly offered by insurers, including:

  • New car discount: When you purchase a new car or one that’s only a few years old, you can often receive a discount.
  • Good student discount: If you’re a student under 25 or have a person in your household who is a student, you can receive a discount if they maintain a B-average (3.0).
  • Vehicle safety discount: Cars, trucks, and SUVs equipped with crash-mitigation systems, advanced safety features, or passive restraints are typically eligible for this discount.
  • Defensive driving discount: If you take an insurer- or state-approved driver safety course, you could be eligible for a sizable discount.
  • Telematics discount: When you use an app or plug-in device to measure your driving habits, you can often receive this discount.

Depending on your insurer, you may have even more discounts. Research companies and scour their website to uncover even more savings.

Shop Around When It Makes Sense

A loyalty discount doesn’t always translate to the best deal for all drivers. In fact, every year or so, you should take the time to explore all of your options to get the most affordable auto insurance, especially if you’ve been with the same insurer for several years or notice an increase in your rates.

Sometimes, the best loyalty discount is the one you get from being diligent in your buying habits. The fastest way to do so is by using our quick comparison tool. Start your journey for the best car insurance rates by gathering quotes from some of the most reputable companies in the business.

Find a Great Rate Before a Loyalty Discount by Shopping Quotes Here

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