Can Insurance Discounts Decrease the Insurance Payments?
Ever since we started offering car insurance, we have talked about how to get cheap car insurance in UAE. We touched upon points like buying insurance online and insuring multiple vehicles with the same insurance company. One thing that we frequently discussed was the discounts such as ‘No Claims Discount’, ‘Loyalty Discounts’, and others.
While car insurance companies in the UAE do offer discounts, does it really reduce your insurance payments? It is what we plan on answering in today’s blog post. After all, our purpose is to help customers buy cheap car insurance that meets their needs. Before we answer this question, let’s talk about something else first.
Why Do Car Insurance Companies Offer Discounts?
Car insurance is a highly competitive business. Therefore, to attract customers and ensure profitability, they rely upon different strategies. For example, they might increase their marketing spend, target a niche market, or engage in promotional offers. For instance, many insurance companies offer discounts when a person takes out multiple policies with the same company. For example, a car owner decides to insure their house with the same insurance provider. The reason for offering the discount is that the company considers you an important customer and wishes to reward you for your loyalty.
Apart from this, you are eligible for a 'No Claims Discount' if you have not made claims in the preceding years. The reason for this discount is that the company knows that you are a safe driver. You are less likely to make a claim in the future, which means that the company does not have to spend money on repairs or other damages. Again, they decide to reward such behaviour.
So, there is no doubt that insurance companies do offer discounts. Now, let us get back to our main topic.
Do Discounts Decrease the Insurance Payments?
Although the question is straightforward, the answer is not because there are many other factors at play. Even after getting a discount, you might end up paying more than before. There are several reasons for it, as we will show in the paragraphs below. So, pay full attention.
One reason is that the insurance rates might have increased overall in your area. Therefore, the insurance company has no choice but to increase your payment. Other than this, car insurance companies use price optimisation. It is an algorithm that utilises various data sets to determine the price a customer is likely to pay. Because of price optimisation, you might be paying more than a new customer.
Additionally, as a loyal customer, you are less likely to leave the organisation. The reason is that you think that the current insurance provider is the best in terms of customer service, claims settlement or other factors. As you are less likely to leave, insurance companies can use the opportunity to increase your rates. You might accept the increase as you want to avoid the hassle of cancelling your current policy and signing up with a new provider.
Hence, even after getting a discount(s), you might be paying a lot more than a new customer. It makes no sense that you should pay more even after getting a discount, right? Nearly every car owner would agree. If that’s the case, don’t worry because we have a solution.
What To Do?
After getting discounts, calculate the final cost that you will pay to the insurer. Now, get quotes from other insurance companies. Compare the final cost with the quotes. If you find a quote that is less than what you are going to pay, send a notice to your provider that you are cancelling the policy. Then, sign up with the other car insurance company. To avoid losing a loyal customer, your current insurance provider might offer you a better deal. Again, compare that with the quote. If you think that the new offer is much better than the other quotes, you can continue with your current policy. If not, opt for the new policy.
Wrap Up
In conclusion, we would like to say that discounts are a great way of reducing your insurance payments. But we recommend that you pay close attention as you might end up paying more even after getting discounts. Therefore, the best thing to do is be smart and compare quotes, as it can help you find a much better policy.