Q & A: Does loyalty to the same insurer lower my car insurance rates?

When we talk about our dogs, our constant companions, we often praise them for being loyal. After all, there's nothing quite like the devoted and faithful attachment of a dog (truly no one else will ever be that happy to see you when you get home each night). But while we love our pups, loyalty isn't always the virtue it's made out to be — especially when it comes to car insurance. (Bet you didn't see that transition coming!). 

As it turns out, loyalty has quite a lot to do with your auto insurance — and your money. Let’s say you’ve been driving the same Volvo for just about a thousand years (give or take). You have insurance to go with it, of course: an auto policy you took out when you bought the car. You haven’t had the time to research new providers, so you’ve kept the same policy all these years. While it may seem like that loyalty would be rewarded in the insurance world, the opposite is often true. Your unflinching loyalty may come at a steep price!

In fact, when it comes to car insurance, some providers may use loyalty, or predictions about which customers are unlikely to switch, as a signal to actually increase prices. In the industry this is called "price optimization," but some consumer watchdogs have called it, more bluntly, price gouging. 

Here’s how it works: Using prediction data, the insurer will attempt to squeeze more money out of these customers under the premise of false loyalty discounts. By imposing higher-than-normal rates (even to drivers with clean records) and then presenting supposed loyalty discounts, you, the customer, actually gets fleeced. If you’re overcharged by 25%, knocking off 5% or 10% isn’t going to amount to much of anything when it comes to saving money. Indeed, in many states price optimization is seen as a predatory practice and is illegal.

More than loyalty, insurance companies reward those who have continual auto insurance histories. Any gap you may have could result in a higher rate. In some states, you can be penalized if you let your insurance lapse even for a day. (If you were listed on a parent’s policy, you’ll want to let your new provider know so that it doesn’t appear as if your coverage was interrupted.) And remember, it’s always a good idea to compare car insurance rates to make sure your loyalty doesn’t translate to higher fees.

Like Shakespeare wrote in Antony and Cleopatra, loyalty can be “well held to fools,” so don’t be taken for a chump! You’ll want to shop around for insurance regularly, and to help you keep track of all your insurance policies — and what you’re paying where — you’ll want to create your Marble account today. We’ve built the first digital wallet for insurance to help you stay organized and in control —and earn rewards while doing it!