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Car Insurance Myths

Loyalty discounts are also called patronage discounts, which can be described as price drops provided to steady customers. Car insurance companies have used this practice to help retain customers. In some cases, the rewards may be in the form of better coverage for the same price rather than a straight discount. This technique of offering customer rewards for maintaining continuous coverage makes customers feel valued and unique.

What Is a Loyalty Discount in Auto Insurance?

The loyalty discount in insurance is closely similar to conventional discounts, but with different defining terms. In auto insurance, a loyalty discount is beneficial to drivers that have been policyholders for a long time. It also rewards individuals who choose to bundle insurance policies by insuring several automobiles or including a home insurance policy. Every loyalty program gives the individual a certain percentage off the overall premium as a gift for being a policyholder for an extended period.

Are loyalty discounts advisable, or they are just car insurance myths?

As nice as loyalty rewards may sound, it doesn’t always guarantee that you are receiving the insurance company’s best rate. Many individuals need to know if a loyalty discount is a good deal or just a conventional reward tactic. Even with a loyalty discount, you should expect a new renewal rate when it’s time to renew your auto insurance policy. Ensure that you closely analyze the overall price increment.

Based on the principle of price optimization, there’s a probability that you are paying a more significant amount for car insurance than a new customer with a similar driving history and policy. Price optimization can be defined as the balancing act of increasing rates to profit without making customers uncomfortable or disloyal. The reason why you’re paying more may be because you’re less likely to switch to another company. Insurance companies may slowly increase your rate in hopes that you won’t notice or care enough to switch insurance companies.

It is advisable to analyze the total price of the policy without discounts. When your rates remain the same through a specific loyalty program, then that indicates a good sign. On the other hand, if the rates increase, you should speak to the insurer or switch companies. In some cases, the rate increase could be due to different reasons aside from loyalty discounts.

More Crucial Details about Car Insurance

After getting a car insurance quote, the insurer uses specific techniques to discover the amount to charge for a premium. Some of the things considered include the driving record, state of the car, and location. Even with the provision of these details, many companies still look for ways to keep the customer.

In car insurance, the use of loyalty discounts come into play when considering how to make longtime policyholders feel appreciated. As a car insurance customer, it’s essential to ensure that the best rates fall into your hands.

Even though it’s beneficial to check for a loyalty discount, it’s also crucial to carefully look into the price that you will pay over time. Some companies follow the principle for price optimization, which makes you pay more or an equal amount to the cost of the reward.

To buy the best auto coverage, contact the experts at The Schwab Agency in Colleyville, Texas today. We look forward to getting you covered.

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The Schwab Agency

The Schwab Agency, LLC has over 20 years of experience within the insurance industry in our community and our goal is to bring you unparalleled service and dedication. Since the majority of our business is through long-lasting relationships with our clients, fulfilling your needs is of the highest priority.

COVID-19 Update:


Due to new increasing cases of Covid-19 our office will be closed to the general public until further notice. Our team will still be working full-time in the office and here to assist with all your insurance needs. Please contact us via phone at (817) 485-5050 or email: info@schwabagency.com.


We hope everyone is doing their part to protect themselves and their loved ones during these hard times, and thank everyone for understanding our decision to do our part to help protect our staff and those in our community.


Tim Schwab.
President and Managing Partner