For a variety of reasons, auto insurance policies include substantial discounts for; high liability limits, payment up front, and having prior coverage. Policyholders who qualify or select these options exhibit behavior that has been identified as profitable for insurance companies. In addition to the favorable behavior, there are technical details by which the premiums can be reduced by these characteristics. Even though a DUI driver is required to take high limits, pay in full, and maintain an active policy, through Florida FR44 insurance, associated policy discounts still apply.
High liability discounts arise for two main reasons. First, most policyholders who choose high limits are careful and responsible consumers, and they drive their cars the same way. Second, liability rates per thousand of coverage decrease as limits increase. The declining rates are because administration costs are the same for each policy, and claim payments, which are often small amounts, don’t access the higher limits.
The discount for paying in full up front is primarily due to investment income. Paying in advance allows the company to earn investment income from your payment before it is fully earned at policy maturity. Businesses can also extend savings by not having to provide invoices at intervals or cancellation notices for non-payment. Also, there are few scammers in this group because cheaters usually pay the lowest amount to start a policy.
Companies typically offer a discount on their renewing policies, and many also include a fading deductible or accident forgiveness program. Renewal policies are less expensive for the business than purchasing a new one due to reduced marketing and underwriting costs. To encourage drivers to leave the competition, companies generally offer discounts to policyholders of almost all companies. Anyone who maintains prior uninterrupted coverage will enjoy discounted rates, whether from their current carrier or a new one.
Many consumers are surprised to find that they can get much more coverage for much less money when discounts are applied. Here is an actual quote to illustrate how substantial these discounts can be. (Quote factors: 6-month policy, married couple, age 30, Miami, Florida homeowners, average credit, one-fault accident, 2004 Honda Accord LX (liability only), 2008 Lincoln Navigator full coverage ( 500 deductible); With one company, a quote of $3,500 with limits on 10/20/10 becomes $2,273 after applying prior coverage and full payment discounts. In another company on 10/20/10 it is $3,068, and after discounts $2,400. At the limits of 100/300/50, the first company costs $4,155 and after discounts $2,130, while the other costs $3,806 and after discounts $2,395.
The cost of insurance depends largely on the discounts that apply. It’s hard to believe that you can buy ten times more liability limits for the same risk, from the same company, for less money when discounts are applied. From the actual quote above, a 100/300/50 policy that includes discounts costs $1,370 less than the same company’s 10/20/10 limits when discounts are applied. Insurance companies do not distinguish between drivers who voluntarily choose these options and those who are required to do so. Drivers convicted of DUI in Florida are required to maintain FR44 insurance with 100/300/50 liability that is paid in full and Florida FR44 insurance companies include the key discounts for them.
