Loyalty Discounts On Your Insurance: How To Determine If They Are Worth Sticking Around For

So many car insurance companies now offer "loyalty" discounts, but what exactly does that mean? Would you want to wait around for years on end for discounts on your monthly premiums, and is it really worth it? Let's take a closer look at these discounts and how to determine if they are worth sticking around for.

The Discount Details

Loyalty means that you stick with someone or something for a very long time. Car insurance companies began offering this discount when fickle consumers would leapfrog to the competitors' insurance to get a better rate. Although it worked to some degree, many companies found that consumers were easily swayed by bigger loyalty discounts. So then some companies devised a loyalty discount program whereby consumers would gain a deeper discount on their monthly premiums for each successive year and/or decade that they remained a loyal customer. In devising these discount tier strategies, they are able to keep many of their customers for longer, sometimes resulting in life-long loyalty because the insurance companies promise zero monthly payments after several successive decades of conducting business with them.

How to Determine If It Is Worth It

Loyalty discounts should reduce your overall charges below a competitor's rates. If you choose a company based A) upon the good rate you get, and B) upon the discount you will incur next year or two years or more from now, it is akin to locking into the rate, regardless of inflation. If you are an excellent driver, additional discounts might bring your rates down faster, which when combined with the loyalty discount that is eventually applied could result in a very handsome auto insurance rate indeed. However, if you are accident-prone or tend to get a lot of speeding and traffic violation tickets, then that loyalty discount does not add up to much over time.

The other problem is with loyalty discounts you see with other insurance providers. If you switch providers (i.e., cancel your "loyalty" with one provider to go to another), then you have lost ALL of the time spent with the first provider to trade for the second provider. If you find that you would rather go back to your first provider because the grass was not greener on the other side of the insurance fence, then you have to start from scratch, with a new rate at current market value for the same policy you had before. You lost all of the loyalty discounts, and will have to start over at a higher rate. It may be better to stick with the first provider to work out your issues than to yo-yo back and forth trying to get the better deal. For more information, contact companies like ESI Insurance Agency.