Multi-Vehicle Discount - Get Insider Facts And Don't Be Fooled

By [http://ezinearticles.com/?expert=Chimezirim_Chinecherem_Odimba]Chimezirim Chinecherem Odimba

You've been told that you can reduce your auto insurance rate with a multi-vehicle discount. Yes, this is true. But while this is true, you might actually have been fooled to pay a lot more even with the "discount." I'll take my time to explain further.

If I sell a product for $1,000 but offer you a discount of 10%, you'll get to pay only $900. 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 a Honda Accord does not imply it will also have great rates for a Toyota Camry. Here's why...

Insurance companies base their underwriting process on factors that will help them give you insurance, handle administrative costs and turn a profit. Top among these factors is their loss and claims history. That is, how much claims where made by a particular profile within a given period.

A particular company might have had a good year with policyholders who drive Honda Accord cars. But at the same time, they might have had far more claims than projected by policyholders who drive Toyota Camry cars. Such an insurance company could easily maintain their rates for Honda Accord owners while adjusting (upwards) rates for Toyota Camry owners to reflect their loss history as a company.

This means that your rate for an additional vehicle might be a lot more than what you would get with another insurer who did NOT have such an unfavorable experience with Toyota Camry owners. Therefore, it's suggested that you first get and compare quotes from other insurers before you can really settle for that multi-vehicle discount.

Remember, a discount only means that they've removed a part of the amount they charge normally. It does NOT suggest that they are offering the best rate out there.

So if you want to insure another car, do extensive comparison shopping. This will help you ensure if you'll really pay less with a multi-vehicle discount from your present insurer.

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Chimezirim Odimba writes on insurance.

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