Will a multi-car discount help you cut down your premium? This cannot be disputed. Nevertheless, some people "lose" money while trying to take advantage of this discount. I'll take my time to explain further...
You'll pay only $900 if a merchant gives you his $1,000 at a 10% discount. However, you've still paid a lot more if this merchant used the "discount" strategy to stop you from visiting another shop where the same product sells for $800 albeit without any form of discount.
The fact that an insurer gives competitive rates for an "A" car does NOT imply it will also have great rates for a "B" car. There things to consider...
When working out your rate, insurance companies apply a number of factors in order to have enough to handle claims, take care of costs of doing business and making good profit. Ranking high among the many factors used in the underwriting process is a company's claims history. A simple definition for this is: Details of claims made within a particular period.
A particular company might have had a good year with policyholders who drive "A" cars. But at the same time, they might have had far more claims than projected by policyholders who drive "B" cars. You'll see that they would be able to maintain their rates for one car while they won't for the other.
What if another insurer did NOT have such an unpleasant experience with "B" cars? They'd likely have a lower rate. So while a multi-car discount is great, make sure you don't stand to gain more elsewhere before going for it.
Remember, a discount only means that they've removed a part of the amount they charge normally. It does NOT suggest that what they'll take from you is less than what others will.
Furthermore, don't forget that I mentioned that insurers do consider many factors. Each factor gets a different relevancy score from different insurers. The end result is: Similar policies will have a big difference in rates.
You'll, therefore, do well to shop around first if you intend to insure a second or third car. Take this discount if it saves you more or go if your bread is better buttered elsewhere.
You'll pay only $900 if a merchant gives you his $1,000 at a 10% discount. However, you've still paid a lot more if this merchant used the "discount" strategy to stop you from visiting another shop where the same product sells for $800 albeit without any form of discount.
The fact that an insurer gives competitive rates for an "A" car does NOT imply it will also have great rates for a "B" car. There things to consider...
When working out your rate, insurance companies apply a number of factors in order to have enough to handle claims, take care of costs of doing business and making good profit. Ranking high among the many factors used in the underwriting process is a company's claims history. A simple definition for this is: Details of claims made within a particular period.
A particular company might have had a good year with policyholders who drive "A" cars. But at the same time, they might have had far more claims than projected by policyholders who drive "B" cars. You'll see that they would be able to maintain their rates for one car while they won't for the other.
What if another insurer did NOT have such an unpleasant experience with "B" cars? They'd likely have a lower rate. So while a multi-car discount is great, make sure you don't stand to gain more elsewhere before going for it.
Remember, a discount only means that they've removed a part of the amount they charge normally. It does NOT suggest that what they'll take from you is less than what others will.
Furthermore, don't forget that I mentioned that insurers do consider many factors. Each factor gets a different relevancy score from different insurers. The end result is: Similar policies will have a big difference in rates.
You'll, therefore, do well to shop around first if you intend to insure a second or third car. Take this discount if it saves you more or go if your bread is better buttered elsewhere.
About the Author:
Start saving a lot at Really Cheap Auto Insurance and Cheap California Auto Insurance. Chimezirim Odimba writes on finance.
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