Is it cheaper to add a second car to insurance?

Save up to 25% on your auto insurance using discounts for multi-car policies. Compare quotes from multiple companies to find the best deal.

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Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance...

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Reviewed byDaniel Walker
Licensed Insurance Agent

UPDATED: Apr 22, 2020

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Here's what you need to know...

  • Auto insurance rates are based on several things including your driving record, accident history, vehicle use, and estimated annual mileage
  • Most of the larger auto insurance companies offer discounts to their policyholders to manage premiums and to influence brand loyalty
  • When you have an existing one-car policy and add a newly acquired vehicle to it, the premiums for each vehicle can go down if the company offers a multi-car discount
  • A multi-car discount is a deduction from the usual cost of your premiums for owning more than one vehicle and insuring at least two of these vehicles with the same insurer

Auto insurance is an expenditure that you can’t avoid when you own a car.

Since almost every state has some sort of auto insurance requirement, it’s important to shop around and find the best premiums from the most reliable companies.

The best way to keep your premiums low is to take advantage of the myriad of different discounts that insurance offer.

There are man different discounts that you can qualify for when you buy insurance, but one of the most common is the multi-car discount.

If you and your family own more than one vehicle that’s in the same household, you may be eligible for this premium deduction.

Start comparing car insurance rates now by using our FREE tool above!

How Auto Insurance Rates Are Determined

Every insurance company takes charge of their own rate making. The purpose of rate making in the world of auto insurance is to estimate how much the company must charge to cover both losses and expenses.

The gross premium is what an insurer must charge an insurance applicant to cover exposure and expenses while still allowing for profits.

While each company sets its own rates, insurance rates are highly regulated through the state Department of Insurance. Because of this, the final rate that the company decides to charge must be

Because of this, the final rate that the company decides to charge must be deemed fair and reasonable by the state.

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How are rates personalized?

Insurance companies don’t just charge you a gross premium. Instead, the company uses several different methods and factors to estimate the risk that’s specific to you.

It’s most common for companies to use class rating, experience rating, and merit rating methods to determine how much to charge you when you’re applying for coverage.

Class rating is used when estimating how much to charge in a specific region or for a specific vehicle. This is most commonly used for standard auto insurance.

For a class rating to be effective, there must be copious statistics available that help to identify the probability of a claim.

Merit and experience rating help insurance companies dive deeper when determining the appropriate rate for an applicant.

When using experience rating, the company looks back on a driver’s loss history and accident history to see how safely a person drives.

Merit rating is used in conjunction with class rating to use personal information to give you premium credits.

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Why is it cheaper to insure a second car under your policy?

Now that you understand how rates are made and personalized, it’ll be a bit easier for you to grasp why auto insurance is cheaper when you add a second car to your policy.

Applying discounts to your policy is part of the rating process that personalizes your premiums.

When you own more than one car and you add a second vehicle to your insurance policy, a multi-car discount is automatically applied.

The reason for the discount is to encourage customers to insurance all of their cars with the same carrier.

By giving their clients a discount on an already existing policy, the insurer can sell you more insurance and you can enjoy added convenience.

Requirements for the Multi-Car Discount

One of the best car insurance discounts is the multi-car discount because it’s the single biggest discount available to standard customers. It’s also a very easy discount to get if you and your family members own multiple vehicles.

While the eligibility criteria vary from provider to provider, most companies have similar underwriting rules.

You’ll need to know the criteria before you assume that the discount will automatically take your rate down. Here are the most common carrier requirements:

  • Each vehicle must be primarily garaged in the same household
  • All vehicles must meet the definition of private passenger vehicle
  • Each vehicle on the policy must have at least liability coverage. If a car has only storage coverage, it won’t qualify
  • Two or more vehicles must be insured with the same carrier either on a multi-vehicle policy or bundled together on single car policies
  • Some companies will offer the multi-car discount if you carry motorcycle insurance with the same carrier
  • Some insurers require all cars to be in the named insured’s name and others will apply the discount for cars owned by household family members listed on the policy

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How is the discount applied?

If you apply for auto insurance for two or more vehicles from the start, the insurer will automatically give you a discount at the time of your quote.

If you purchase a new vehicle and add it to your policy, the discount will be applied to each vehicle to take the rates down.

If the carrier you do business with doesn’t sell multi-vehicle policies, you may have to give them your other policy number to get your discount on each of your single-car policies.

It’s also important to check every renewal when you have single vehicle policies so that you can ensure the discounts don’t accidentally fall off.

How much can you save with a multi-car discount?

Every company has its own discounts. Some companies are more generous than others when it comes to deducting money for adding a second car.

The typical savings is between 2 and 22 percent for bundling your insurance. Make sure to compare the discounts to find the best savings.

The only way to see where you’ll save the most money by bundling your auto insurance is to shop around.

If you’re interested in comparing premiums on your own, use an online rate comparison tool and get instant quotes now.

Adjust coverage options and see which carrier offers the best multi-car coverage at the most affordable price.

Use our FREE tool to compare rates from three to four car insurance companies NOW!

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