Understanding the Multi-car Discount

What is the multi-car discount, how it’s good for agents, insurance companies and consumers alike, and other things to consider when dealing with it.

Two cars. Yup, they qualify.

Regardless of your driving record or what you drive, when shopping for car insurance you should be on the lookout for one thing: discounts, and plenty of them. While different companies offer different discounts, just about everyone out there has a multi-car discount. In fact, we can’t think of a single major standard auto insurance carrier that doesn’t offer it.

The multi-car discount is beneficial both to you and to the insurance company in several ways. If you qualify for it (and that’s pretty easy: just have more than one car in your household), you should definitely go for it.

Why Insurance Agents (and Companies) Like the Multi-car Discount

Any insurance agent doing his or her job is out there constantly scrambling for new business. At least just as important is retention. Established agents and companies alike make the clear majority of their income on renewals.  From their standpoint keeping clients is just as important as getting new ones.

Insurance companies know their customers are much less likely to drop them if they have more than one policy with them. Therefore, they are keen to do whatever it takes to get those multiple policies. This is the main impetus for companies to offer a multi-car discount.

“Multi-line” companies such as Allstate, State Farm and Farmers take this a step further. By definition, multi-line insurance companies sell other types of insurance such as homeowners, renters and life insurance in addition to auto insurance. Accordingly, they routinely offer additional auto insurance discounts if you buy other insurance lines from them because of the retention factor. This “packaging” philosophy is big deal among multi-line companies. Ask any of their agents.

Why the Multi-car Discount is Good For You

While you certainly can shop around and insure each of your vehicles with different companies, that’s a hassle at best. Wouldn’t it be much easier to find one good company and insure all your vehicles with them? You get a discount for it, so why not?

The multi-car discount usually applies to all vehicles driven by people residing at a common address. This typically includes spouses, but it can also include relatives or friends living with you. It’s not necessary for all the vehicles to be registered to the same person. Each driver in your household can have one (or more) car registered to them.

The multi-car discount is also particularly helpful if you have a teenage driver. Insuring teenagers is invariably expensive, but including your teen and his or her car in your multi-car discount can take quite a bit of the sting out of that. Indeed, it makes no sense for anyone to insure teens on their own when a multi-car discount is available. Some carriers will even qualify them for the discount even if they have to insure with a non-standard company. That is, of course, if they insure with a non-standard company affiliated with the aforementioned carrier. Most companies have at least one.

What’s more, the multi-car discount doesn’t necessary have to involve another “car.” Some companies will allow you to include a motorcycle or recreational vehicle to qualify for the discount. Ask your agent for more information specific to your company.

Other Multi-car Discount Considerations

In order to qualify for the multi-car discount, all of your vehicles need to pass underwriting on their own merit. This can exclude any kit cars, classic cars and commercial vehicles you may own (although other multi-car discounts are routinely available for the latter).

If you’re insuring a lot of vehicles in your household, you may want to consider an umbrella policy as well. An umbrella policy is an inexpensive way to effectively increase your liability coverage in a dramatic fashion, typically in increments of $1 million above and beyond the underlying policy limits. Umbrella policies cover both homeowners and auto policies, although other property and casualty lines may sometimes be included as well. Most companies require minimum underlying limits on the base policies and – of course – require that you have the underlying policies with them.

If you’ve acquired a lot of assets, you’ve also acquired a lot of risk exposure. An umbrella policy helps you cover that risk in an effective manner.