When automobile insurance companies advertise, they may be using language in a way that makes discounts sound much more than they really are. Sometimes the true picture may be hidden within the fine details but often it may be completely obscure. For example, motorists can get excited seeing savings up to 30%. But most people won’t get anywhere near that amount and this saving may only apply to part of the policy coverage rendering it insignificant in the end.
That is why a vehicle insurer offering as much as 20% savings for certain qualifications can actually end up more expensive than another carrier offering no particular discount. Not only they may not honor the full discount but also it may be used to hide the truth that their rates are much higher than their competitors to begin with.
Motorists should be aware of honey trap discounts and don’t base their shopping strategy on chasing them. It is always helpful to look for any saving opportunities but it is best to confirm their effectiveness by looking at the final price in comparison to quotes received from other providers.
Here are some of the secrets about car insurance discounts showing how tricky they can be;
- There may be a cap to percentage of discounts you can get
When you add up all the savings you qualify you would expect to get a cheap auto insurance quote. So, you may be surprised when it doesn’t materialize. Often insurers have a cap on the size of total discounts they are willing to offer. For example, you may appear to be getting 60% overall savings because of all the qualities you have but you may end up getting only half the discounts as a result of the cap in place.
- Up to 30% means only the very best will get such discount
Many other applicants will not even get half of that. There may be conditions attached to it that disqualifies many motorists from even applying for it.
- Auto insurance discounts vary according to states
State rules may prevent certain rating factors from being used in premium calculations. For example, California doesn’t allow credit checks to be carried out for the purpose of determining premiums to be charged. Also, companies may not offer certain saving opportunities in every state they do business in and they may only be available in places they need a competitive edge. Secondly, the percentage may vary from one state to the other. Finally, state authorities may actually require carriers to apply certain savings. For example, New York requires companies to offer discounts to motorists who completed defensive driving courses.
- Some discounts only apply to certain car insurance coverage
Motorists should read the fine print before going ahead and spending money to qualify for certain savings because applying a large saving only on one type of coverage won’t save many dollars. For example, many companies advertise 10 – 15 percent savings for car security features but it saves them only a chump chance in the end because it only applies to theft coverage, which is only one of the perils within Comprehensive coverage.
- Certain vehicle insurance discounts cannot be used together
Motorists may be allowed to get only one of them. For example, there may be a 9% saving for paying the premium in full and a 4% for buying the policy in advance. People may think that they will get 13% discounts if they buy in advance and pay in full. Unfortunately, companies often would allow only one discount linked to the way you purchase a policy.
- Discounts aren’t necessarily automatically applied
That is why experts suggest motorists should shop around for automobile insurance at least once a year. When they are getting new quotes, they get asked questions that reveal new ways of saving money and your current vehicle insurer may not know about them. And that is how your carrier can negotiate your car insurance down. When you ask them if they could lower your premium a bit, they go through your details again to see if they can find new discounts that weren’t discovered the last time or you didn’t qualify for them then. So, it is often worth asking your carrier or agent to go over your details and see if they can reduce the costs a bit.
- Discounts can be honey traps
They may obscure the real picture intentionally or unintentionally. For example, many motorists would be very pleased to know that the company they have been with for the last 5 years offers them a 10% loyalty discount and it is often enough for the policyholder to feel grateful and sign up for another term. However, the same company’s auto insurance premium calculation algorithm may single out the policyholder as the perfect candidate for price optimization and don’t apply their best rates to them because they are deemed unlikely to leave the company over price. So, price optimization can cost the policyholder 20%, making them 10% worse off even after the loyalty discount. Importance of shopping around at least once a year cannot be stressed any harder. Believe whatever you want but verify that you are actually treated favorably by your long-standing insurer.
- Discounts aren’t forever
Motorists may be offered special deals to entice them but it may be one off. For example, many providers offer extra incentives to switch to them and such offers are normally one time only. Furthermore, motorists can lose vehicle insurance discounts they were getting when the circumstances change. For example, getting one speeding ticket after many years of clean driving records would mean that motorists would lose their good driver discounts once the company discovers it.
- Some advertised discounts may take time to get
Motorists may sign up for a discount program like usage-based policies. They may get a small discount at the start but bulk of it may be applied only after successful completion of the program. In case of usage-based savings, companies install a telematics device to your car to monitor your driving. If they are happy with the results they are getting, they may apply the full discount from the next renewal or at a later date. Also, these programs can actually increase your vehicle insurance premium if it turns out you aren’t a good driver.
- Every automobile insurer has a different set of discounts
Not only do they have different ways of rewarding applicants but also they apply different percentages for each qualification. For example, discounts for being accident free and having no traffic ticket on record are very common but the percentage applied is different and some companies may actually offer two separate discounts for each item while many others may consider them together.
Yes, car insurance companies may play secret tricks to make the discounts look much bigger than they really are. Nonetheless, discounts are the main reasons you can get cheaper premiums. That is why you should aim to qualify for as many of them as possible, ask if there are any more you can have and don’t give up looking even right before paying for your policy. You may actually save more money if you can pay or buy your policy differently. And whatever you do, don’t buy without shopping for the best prices.