Understanding Multi-Car Insurance Discounts

A residential garage with two cars where the owner is getting a multi-car discount.
••• Joelle Sedlmeyer / Getty Images

If you have multiple passenger vehicles in your household insured by the same insurance provider, you’re in luck. You will automatically receive this great multi-car insurance discount. Some families may have insurance provided by different companies. If this is the case, you should contact both companies to see if combining your cars under one policy makes financial sense. The multi-car discount won’t make it worth running out to buy two vehicles just for the heck of it, but it will certainly make the regular premiums a little easier on your wallet.

If you have two or more vehicles, shopping around for car insurance only becomes more important. If you have five or more vehicles, it’s fleet insurance you should be after, not a multi-car insurance discount.

The Ins and Outs of a Multi-Car Discount

The multi-car discount is probably one of the most common car insurance discounts. If more than one vehicle has coverage under a single policy, the multi-car discount is automatically applied. The vehicles on the policy need to have personal liability and property damage (PLPD) coverage or more to qualify for the discount.

The multi-car discount is added to each individual vehicle once. At the time the second vehicle is added, the discount is applied to both vehicles. If a third vehicle is added, the discount is added to the third vehicle at that time. The original vehicles will remain the same. The discount does not compound with more vehicles added.

Multiple vehicles in a single household, by design, get the multi-car discount. The only time the discount does not apply is when the second vehicle on the policy is in storage—known as comprehensive coverage.

Multiple Policy Discounts

Some policyholders may have several insurance policies with the same carrier. For example, they may have a homeowner's and an auto insurance policy. Insurance providers will reward customer loyalty by offering a discount for multiple policies. With some providers, the different policies can even be separate car insurance coverage. For example, if your teen driver has a separate policy but lives in the same household, then the discount can be applied. The multi-car discount can really help reduce the high cost of insurance for a teen driver. Ask your agent if it is possible to get a multi-car discount if you have multiple auto policies in your household.

More Than Just Automobiles

The multi-car discount is actually available on policies other than your car insurance. Motorcycle policies commonly have a discount for policyholders with several motorcycles. The same rules apply. It is less common, but boats and RVs are also eligible to grab this premium reduction. However, this is less common because people often only own one boat or one recreational vehicle.

Nice to Have

Remember, the multi-car discount is nice to have, but it's unlikely that two cars will be cheaper than one on an insurance policy. Though people are sometimes very disappointed when they remove a vehicle from their car insurance policy and their premium is only reduced by $10 to $20 a month. This is because when the multi-car discount is removed, the rate for the single remaining vehicle will be higher. Little quirks like this can be frustrating when you do not really understand how the policy works. Make sure you ask your insurance agent if you ever have questions about your policy coverage or premium.

It is a good idea to keep all your vehicles under one insurance carrier. Both the multi-car and multi-policy discount make it very difficult to financially benefit from separating your policies with different insurance providers.