Multi-Policy Discount — When You Should Ignore It
If you need a discount, get your new insurance policy from the same insurer you bought your other policies from. It is called a multi-policy discount.
That said, it may not benefit you more to do this as you might be more profitabe if you buy each of your policies from different insurers. I'll take some time out to explain this...
We'll make-believe that a given insurance shopper received the following rates from several insurance companies when he shopped for different insurance policies...
Insurer A...
Auto insurance: $2,487
Home insurance: $1,400
Health insurance: $2,320
Insurer B...
Auto insurance: $1,472
Home insurance: $2,120
Health insurance: $2,724
Insurer C...
Auto insurance: $3,500
Home insurance: $2,080
Health insurance: $1,640
As is now obvious, the insurance company who offered the lowest quote for auto insurance didn't have the cheapest for any other insurance policy.
Hence, even if this insurer gives him a 10 percent multi-policy discount the sum spent on insurance would be...
$1,472 + $2,120 + $2,72 = $6,316
$6316 - (10 percent of $6316) = $5,684.40
Conversely, he would spend the following on insurance as a whole if he goes for the insurer that gives the lowest rate for each policy...
$1,400 + $1,472 + $1,640 = $4,512
This case study proves that it's more profitable for this individual to buy from several insurance carriers as he would save more that way.
In this example he will save $1,172.40!
This is impressive; but how do you determine which is more favourable since another individual could actually be better off with a multi-policy discount?
So here is how to find out...
Get a good number of quotes from different insurance providers for your different insurance policies. Check what you will get as multi-policy discount and compare it with what you'll pay if you buy from different insurance companies.