January 12, 2012

Why Some State Auto Insurance Laws Ban Loyalty Discounts

State auto insurance laws are constantly changing. It's not just about coverage requirements. It's all about how they view loyalty discounts. Many states are banning loyalty discounts, which can have a significant impact on the cost of car insurance. When searching for auto insurance online, it's important to know what a particular state's laws are on the matter to find the lowest premium possible.

Many states, including California, have passed laws that don't allow loyalty discounts because they say that it is unfair to other drivers. Loyalty discounts are discounts that many insurance companies provide customers who have been within for a certain number of years. It is used as a way to keep a customer from switching insurance companies.

The problem is that not everyone has had the chance to become a loyalty customer. Those who are just moving into a state may not have had access to that company in the past, therefore the loyalty discounts that they could get are not applicable and therefore not fair.

While it helps to make it fair for incoming customers, it has a negative effect on the cost of auto insurance online. Those who have been taking advantage of the loyalty discounts are having them removed from their policy, thus driving up the cost of their premium. People are switching their insurance companies in an effort to save money.

Many state auto insurance laws are banning other loyalty and discount programs as well because they are considered discriminatory. While insurance companies don't see it that way, they are not allowed to offer them in some states. Meanwhile, other states that don't have the laws, the companies can continue offering the discounts to all of their loyal customers.

Understanding insurance laws in regards to discounts can make it easier to find the best rates online. If a particular website is advertising discounts that are actually illegal within a particular state, it will be easy to determine that they are a website scam. Either that or a letter will appear within weeks of signing up to say that there was a misquote on the website.

For anyone who is looking for low insurance, it's important to know why the bans are happening on loyalty discounts and how to combat it. While it's impossible to change the mind of the state legislature, comparing quotes can make a difference on the actual premium quote. The act of saving a few dollars each month can pay off, despite the fact that there may no longer be loyalty discounts or many other discounts because of what the state laws have determined to be unfair or discriminatory.