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UPDATED: Apr 23, 2020
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As auto insurance is required by state laws throughout the U.S., finding the most affordable coverage options can be a challenge.
And while these policies can help with saving money, a multi-policy option may not be the best way to go depending on each person’s individual coverage needs.
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Companies offering multi-policy coverage allow drivers to combine other types of insurance coverage offered by the company into one policy plan.
For many drivers, this translates into the lowest auto insurance rates since most companies apply discounts to the individual policies that make up a multi-policy plan.
For example, a home and commercial auto insurance company will discount the price on one or all of the three individual policies. Such discounts allow companies to get more customers and also keeps existing customers from doing business with competing companies.
Families with multiple cars and/or multiple homes may also qualify for their company’s multi-policy plan.
And while the discounts available through multi-policy plans can reduce overall auto insurance costs, other factors can influence whether a particular coverage plan is actually affordable.
Factors affecting affordability include:
- Driver history
- Type of car used
- Individual coverage needs
Finding affordable coverage has as much to do with each driver’s situation as it has to do with qualifying for company discount offers.
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Individual Coverage Needs
Just as each state has its own minimum coverage requirements, auto insurance companies must also include these requirements within an auto policy.
Many people opt for additional coverages for various reasons, some of which include:
- The vehicle’s age
- Family protections
- Financial protections
Coverage types range from the bare bones liability protection to collision, comprehensive and uninsured motorist coverage.
Someone with a newer model car may opt to include collision or comprehensive coverage in order to recoup the car’s value in the event of an accident or loss.
Having sufficient medical coverage in the form of bodily injury protection may be a priority concern for drivers who transport family members on a regular basis. Not surprisingly, these additional policy coverages can significantly increase the costs of an insurance policy.
Also of concern is a driver’s individual risk rating in terms of whether a company classifies a driver as a high, low or standard risk. Drivers in high-risk classifications have a poor driving history, so companies charge them higher coverage rates.
When this is the case, a multi-policy plan may not provide the most affordable rates as other companies that specialize in working with high-risk drivers may offer more competitive auto insurance rates.
A person’s driving record carries considerable weight when it comes time for an insurance company to determine coverage rates. And while low-risk drivers tend to have good if not excellent driving records, they can still qualify for non-standard or high-risk insurance coverage.
For someone who drives a specialty car, this can translate into lower insurance coverage rates than what a standard issue company may offer. Specialty cars include high-value sports cars, muscle cars or older model antique cars.
As the type of car is one of the qualifying factors for high-risk coverage, a high-risk insurer may be in a better position to offer affordable coverage rates for a specialty car.
In some cases, a high-risk insurance company is a subsidiary of a larger, more well-known company, which gives the subsidiary the solid financial backing needed to offer competitive insurance rates in the marketplace.
In effect, the discounts offered through a multi-policy plan may still leave a driver paying higher coverage rates for a specialty car than a company that specializes in insuring specialty cars.
The same can be said for the coverage rates paid on a home or business insurance policy that’s part of a multi-policy plan. Ultimately, drivers may be better off going with a different company if the auto coverage rates paid on a multi-policy plan are more than the costs of an individual policy through another company.
People looking for the most affordable coverage options should take advantage of the highly competitive nature of the auto insurance marketplace.
Ultimately, a driver’s record and the specific coverage options available through an insurance company determine whether a multi-policy plan is more affordable in the long run.
It’s in a driver’s best interest to do company comparison’s on a regular basis in order to stay on top of changes in the marketplace.
Changes in a state’s minimum insurance requirements can trigger changes in the existing rates and coverage options offered by auto insurers. So, the coverage provisions included in an existing multi-policy plan may not be enough to provide the financial protections of driver needs.
In this case, increasing auto insurance coverage allowance in order to keep up with marketplace changes may end up costing more for a multi-policy plan than another company would charge.
Shopping for the most affordable auto insurance rates means researching company offers to see which ones offer the best rates. Compare rates today with our FREE tool!