These days it feels like everyone wants to reward customer loyalty

Whether it’s shopping at your favorite clothing store or ordering from the same local eatery each weekend, we’re offered savings with special promotions, discounts, and points that are “just for us.” And when we feel special, when we get rewarded, we want to stay loyal customers. So we keep going back. 

Auto insurance companies know this, so many will offer a customer loyalty discount for things like continuous coverage or bundling insurance policies. It’s an effective way to get insurance customers to feel valued and like they are saving money. 

Even though a loyalty discount sounds good, it may not actually save you money in the long run. That’s because the insurance industry sometimes sets prices using something called price optimization. This is basically an algorithm that figures out how likely a policyholder is to stay a customer and how likely they are to pay higher premiums over time. With companies that use this method, loyal customers can end up paying more money for a car insurance policy than a new customer.

As a car insurance customer, you have to take matters into your own hands to make sure you get the best rate on car insurance. Even though it would be easy to just look at the discounts available from your current insurer, the price you end up paying is what you need to consider. To make sure you get the best rate on your insurance policy, look beyond the loyalty discount, and compare personalized quotes with Insurify

What is a loyalty discount

A loyalty discount rewards drivers who have stayed policyholders for a continuous period of time or who choose to bundle insurance policies by insuring multiple vehicles or adding a home insurance policy. A loyalty discount gives you a certain percentage off your total premium as a reward.

But a loyalty discount alone may not mean you’re getting the best possible rate with your insurance company. In fact, it can mean that you’re paying more for your policy over time.

Where do car insurance premiums come from, anyway? 

When you get a car insurance quote, each insurer uses its own algorithm to calculate how much to charge you for an auto insurance premium. This takes into account information like whether you have a clean driving record, if you have an old or new car, and even where you live. 

While this information is generally used to determine your risk as an auto insurance customer, existing customers come with a new question: how likely are they to leave the company? 

This is where loyalty discounts come into play. Insurance companies offer loyalty discounts as a way to make longtime policyholders feel appreciated and rewarded. And while this can increase the odds that you stay a loyal customer, it doesn’t mean your rates will stay low over time.

The balancing act of raising rates high enough to profit without scaring away customers is called price optimization. And according to one NPR report, this could lead to higher rates for loyal customers

So are you really saving with your loyalty discount, or is it simply masking a rate increase

Are loyalty discounts a good deal? 

When it comes time to renew your auto insurance policy, your insurer will send you a new rate for your renewal. Even with a loyalty discount, it’s important to consider the overall price increases

Because of how price optimization works, you could be paying more for car insurance than a new customer with a similar policy and driving history. This is because, as a loyal customer, you’re less likely to stray to competing companies. With price optimization, your insurer may take the opportunity to raise your rates more. 

So instead of tallying discounts, look at the total price of your policy. If your premium hasn’t increased by much from one period to the next, it’s a good sign. But if you see a significant rate increase even after a loyalty discount is applied, it could be time to start looking elsewhere. 

This isn’t to say your car insurance company is out to take advantage of you. Some car insurance companies claim they don’t use price optimization, while others claim they aren’t trying to get the highest rate possible out of loyal customers even if they use this method. 

Car Insurance Companies Offering Loyalty Discounts 

These car insurance companies offer loyalty discounts to their policyholders

  • Progressive: Progressive’s customer loyalty program offers tiers of rewards for continuous customers. Part of the program includes a continuous insurance discount, but other perks become available the longer you stay a member. Perks include small accident forgiveness, teen driver discounts, large accident forgiveness, priority call routing, and a lifetime renewal guarantee.
  • GEICO: GEICO’s customer loyalty discount has more to do with how many policies you purchase rather than the amount of time you spend as a customer. GEICO offers up to 25 percent off for multi-vehicle or multi-policy discounts, meaning you can save if you bundle other cars or a homeowners policy with GEICO
  • State Farm: State Farm is another auto insurance company that rewards loyal customers who choose to insure multiple vehicles or bundle a car insurance policy with homeowners insurance.
  • USAA: USAA offers a loyalty discount to customers who bundle policies or maintain continuous insurance coverage

Get Affordable Car Insurance Within Minutes!

Don’t let the promise of a loyalty discount keep you from checking out the competition. When it comes time to renew your policy, the best way to get affordable car insurance is to compare personalized quotes. 

Affordable car insurance is only a few clicks away when you compare personalized car insurance quotes with Insurify. After answering a few simple questions about yourself and your driving history, you can build the insurance coverage you want and get personalized quotes from multiple insurance providers all in one place. Whether or not you’re a loyal customer is moot when there’s savings at stake.

Score savings on car insurance with Insurify

Compare Quotes


Updated November 30, 2020

Mandie Kelleher is a freelance content writer for financial services and personal finance. With a background in financial administration, and teaching, she crafts content that deepens her readers' understanding by making complex topics simple. You can learn more about Mandie by visiting her site,