This article discusses the potential discounts that are available to auto insurance consumers. The article also discusses certain discounts that are not available to auto insurance consumers. Because insurance laws differ from state to state, any issues here are specific to auto insurance in the state of Illinois.
Illegal reimbursement vs. legal discounts. Insurance producers are absolutely prohibited from using discounts in their business practice. Discounts offered by insurance companies are fine.
If and when insurance (agents) representatives, not the insurance company, returns any part of their commission to clients to ‘encourage’ them to buy from agents, then a refund has occurred. For example, when an insurance agent offers a $25.00 gift card to customers who purchase an auto insurance policy from him, then this is a refund and is strictly illegal. If the agent offers a $5 lunch card for anyone who gets a car quote, or a nice pen for the house quote, then no rebate purchase is required. Any material amount given to buyers in exchange for them purchasing a policy is always a refund. An insurance agent and a client (if you know it) are breaking the law if they are making a refund.
It is not classified as a refund if the insurance company’s head office returns a premium or a portion thereof, or gives the customer a rest or allowance on their insurance premium. The proper term to describe this lawful act is discount. in reality, discounting is a common practice in situations of intense competition.
In larger cities like New York or Chicago, competition between auto insurance companies is severe. There are many insurance companies and thousands of competing insurance agents and agencies. Customers should never request or accept offers of ‘discounts’ beyond what is permitted by the auto insurance company’s headquarters.
Possible discounts for customers of auto insurance companies in Chicago, Illinois (The legal list of discounts you can apply for:
1. Discounts for previous insurance. Clients can get around 10% if they provide evidence that they had previous insurance without interruption for at least six months. Depending on the insurance company, your old policy should not have expired more than thirty days ago. The longer you have had your insurance, the higher the discount rate. You must provide proof, official proof, from the previous insurance company. Statements made by your agent or temporary documents are not enough. Proof must be a valid insurance identification card issued by the previous company, not the agency, or a statement page from your contract.
2. Multiple auto policy discount. You get around 10% for having two or more vehicles insured under the same contract. Keep in mind that you cannot insure your next-door neighbor, or partner, under your policy. The insured named in the policy must have an ‘insurable interest’ in the car we are insuring.
3. Discount for owners. If you own a home or condo, you may qualify for a price reduction. Insurance companies usually ask for proof (mortgage payment or home insurance policy) as proof of home ownership. In the event that you own a home in your cousin’s name, this may not qualify you for this discount.
4. Discounts for having multiple policies (package policy or multi-account discount). Insuring more than one policy with the same insurance company may earn you discounts. For example, if you buy a life policy or a condo insurance policy with the same company, you may be entitled to a discount on your auto insurance policy. Certain insurance companies offer deep discounts on these auto and home packages.
5. Discount for part-time drivers. This discount is normally applied in scenarios where the number of adult drivers exceeds the number of vehicles, with an additional young driver under the age of 25. Some companies will allow ‘casual’ status for young drivers in those situations, and a discount is given.
6. Good discounts for students. This discount is available with standard and preferred carriers for insured students who have a high GPA at their school. The discount is approximately 5% of the vehicle liability premium that is assigned to that specific good student operator.
7. Car security system discount. This is another limited discount of around 5% on the comprehensive insurance premium only (no liability or collision premium). Most companies give this discount automatically because most vehicles come with a security alarm anyway.
8. Other miscellaneous discounts such as anti-lock braking system, airbags, etc. Most of these are minimal discounts and most rating systems already include them in the final premium.