February 12, 2010

What Are Auto Insurance Customer Loyalty Discounts

Auto insurance is often an expensive investment, but can be made less so by companies who offer customer loyalty discounts. One of the largest problems facing insurance companies is the ability to retain clients, especially given the sheer volume of providers now available via the Internet. This has led to an increase in a long-standing practice, which is the reduction of rates for certain customers based on their time having been insured by the company, along with how many vehicles and other items they have insured there. These discounts can make even a marginal insurance company more appealing.

For a first time buyer, an auto insurance quote can be a daunting number. With no years spent with the company, the total can be quite high, even with an excellent driving record. Companies attempt to off-set this by promising discounts if the customer is loyal. Loyalty’ in this case is defined both by how long the customer stays with the insurance provider and also how many policies the customer purchases from them. While some discounts will simply take time to manifest, such as a percentage decrease in premium price per year the client has been with the company, there can be other, more immediate discounts available for clients. These can help keep premiums manageable.

One such discount commonly happens if there are multiple cars or drivers in a household, and the client chooses to insure all of them under the same policy. The subsequent auto insurance quotes for the 2nd or 3rd car and/or driver will typically be quite a bit less than the initial quote, ranging anywhere from a 10% to a 25% savings. This both encourages customers to purchase more policies and generates higher revenues for the company. Other factors which may affect discounts can include the age of both the cars being insured and their drivers, the accident records of all drivers insured, and even if other, non-automobile services are being purchased. Most insurance companies do not simply deal in car insurance any longer, and will offer price reductions if home and other specialized motor vehicle coverage is purchased through them.

While a steep discount is no replacement for excellent service and the ability to pay out on claims, customer loyalty discounts can take the edge off of what can be significant bill each month. Every company will offer a different schedule of discounts and offers depending on what services are combined and how long a client is willing to stay with them. These discounts, combined with an effective and efficient response to customer needs, can greatly increase a client’s satisfaction with their insurance provider, leading to a mutually beneficial arrangement.