Ask For Too Much Auto Insurance Discount and You May Be Breaking The Law!


by Ed Sneineh

 This article list summary of the possible discounts available for consumers shopping for automobile insurance. The article is also about certain discounts that auto insurance people must not be asked for.Because insurance laws vary from state to another, any issues here is specific to the auto insurance in the State of Illinois.

Legal Discounts Vs Illegal Rebates. Insurance agents are strictly banned using rebating in their business dealing.

Rebating takes place when the agent, not the insurance company, gives back some or any valuable share of his/ her commission to the customers to 'induce' them to purchase insurance. For examples, when an insurance agent provides a $25.00 gift certificate for buyers who buys car insurance policy from him or her, then this is rebating, and is strictly illegal. If the agent offers  a $5 lunch card for people getting a car quote, or a nice pen for home quote then this is not rebate no purchase necessary. Any materialistic amount given to the buyers in return of them buying a policy is always rebate. An insurance agent and a purchaser (if s/he knows) are breaking the law if they are committing rebating.

If the main office of the insurance carrier provides a portion of the premium to the client (ie. rewarding customer for good management style, etc.) then this is not a rebate. In many instances this is called Discounts. Neither the client Actually discounting is a common practice in situations with intense competition.


In large metropolitan areas like Salt Lake City or Chicago, competition between car insurance companies is intense. There are hundreds of insurance companies and thousands of agents and insurance agencies who are competing against each others. Customers should never ask for or accept offers of 'discounts' beyond what the main office of the auto insurance company presents.

Possible Discounts for Clients of Auto Insurance Companies in Chicago, Illinois

  •   Prior insurance discount. Companies may give you about 10%, more or less, if you had prior insurance, continuously for a minimum of 6 months. Depending on the insurance company, your prior policy must not have lapsed more than thirty days ago. The longer you had your insurance, the higher the discount rate. You need to show a proof that you had the car insurance. Statements made by your agent or temporary documents are not good enough. The proof has to be in the form of valid insurance ID card made by the prior company, not agency, itself, or a declaration page of your policy.
  •   Multi car discount. If you insure more than one vehicle you get a 5% to 10% discount. Remember that you cannot insure your next door neighbor, or fellow worker, under your policy. The named insured on the policy has to have 'insurable interest' in the auto we are insuring.
  •   Discounts for being a homeowner. Owning a condo or a home may qualify you for a discount. Companies normally ask you for a proof (mortgage payment or home insurance policy) as evidence of ownership of a residence. So if you own a house but the mortgage is under the name of your son in law, you may not qualify you for this discount.
  •   Multi policy accounts discount. Taking another policy besides the car insurance policy may permit you to get a mutli account discount. Example, if you buy a life policy or condo insurance policy with the same company you may qualify for a discount on your car insurance policy. Certain insurers provide deep discount on these home and auto packages.
  •   Part time driver discount. This discount is normally sought for young operators (under age 25) in situations when the number of adult drivers is equal to or more than the number of cars covered. Some companies will allow a 'part time' status for the youthful operators in those situations, and a discount is applies.
  • Discounts for good grades. This discount is available with standard and preferred companies for insured students who maintain high GPA their school. The discount is about 5% of the liability premium of the vehicle that is assigned to that specific good student driver.
  •   Discount for having security system. This is a small discount of about 5% on the premium of the comprehensive only (not liability or collision premium). Most companies give this discount automatically because most vehicles come with a security alarm anyways.
  • Other miscellaneous discounts like as antilock brake system, air bags, etc. Most of these are negligible discounts and most rating systems already embrace them in the final premium.
_End_

Ed Sneineh, Charted Life Underwriter, former college educator of insurance, & founder of Chicago based Insurance Navy, a leader in providing affordable insurance prices. Visit us and get your price 5 minutes or less from over 20 insurers like AAA, Travelers, Progressive, Hartford.
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