Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Mar 13, 2020

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Car insurance companies charge variable rates to customers depending on several factors, including a person’s driving history, credit score and type of vehicle being insured. Your car insurance rates may increase if you are involved in a car accident or if you receive traffic violations that put you at higher risk of being involved in an accident.

There are many ways to reduce the cost of your car insurance, regardless of your current rates. Even if you do not have a perfect driving history, you can save money on car insurance by taking advantage of discount programs with your insurance company. Some common discounts include safe driving discounts and multi-policy discounts.

What is a Multi-Policy discount?

Most insurance companies carry several types of insurance. In addition to auto insurance, companies may carry coverage for homes, motorcycles, boats or life insurance. Generally, the more policies you have with a single insurance company, the lower the rates will be on every policy. Sometimes the discount is enough to cover the cost of the less expensive policy, allowing you to obtain additional coverage for free.

For example, if you have an auto insurance policy, you may choose to purchase renter’s insurance. A renter’s policy pays for your personal property in the event that your apartment or rented property is broken into or if the items sustain damage. Renter’s policies are usually very inexpensive, costing less than $20 a month in some cases. The discount you would receive on your auto insurance may be enough to pay for the renter’s insurance, or at least pay for the majority of it.

If you own a house or have several types of vehicles, you will need to purchase insurance for them. You cannot drive a motorcycle without proper insurance, for example, and you will need to carry homeowner’s insurance if you have a mortgage on your home. Since you need to carry multiple types of insurance anyway, you might as well purchase them all from a single company and take advantage of a discounted rate.

Why do insurance companies offer these discounts?

The more policies you carry with a single company, the more money that company will gain from you in premiums over your lifetime. Because it is very unlikely that you will need to file a claim on every single policy that you own, you will be profitable to the company on at least one of your policies.

Insurance companies also offer discounts like this to help grow their company, especially if a particular insurance line is new. For example, if your car insurance company begins selling life insurance policies, existing auto insurance customers may be offered a substantial discount on a life insurance policy. This helps to rapidly swell the account and bring in a loyal customer base that can translate to further growth as customers refer friends and family to the company.

Some companies may also offer these discounts as a way to bring new customers to the company. If they advertise the discounts that a person can obtain by bundling service, an insurance company may be able to attract the attention of a new customer with multiple types of assets to insure.

While individual rates on any particular product may be lower with a different company, you can often obtain the best rates by bundling your service. If you are considering purchasing additional insurance to qualify for a bundled discount, be sure to ask your customer service representative what options you may have. If you are currently paying for insurance with another company, see if your agent can meet or beat your current rates; it may also be worthwhile to comparison shop with other companies to see if you can have your company beat the lowest rates available.

By taking advantage of multi-policy discounts and other types of discounts available to you, you can save money on your insurance regardless of your driving history. If you maintain safe driving practices and accident-free driving for several years in addition to your other discounts, your insurance rates will become even lower. Any money you save on insurance is money you could invest in other things, or your lower insurance rates could allow you to purchase better coverage for your cherished belongings.