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Car Insurance Loyalty Discount: How it Works, Pros and Cons

Team AckoJan 17, 2024

Everyone likes discounts, be it on the smaller products like shampoo or larger purchases like a car or a Car Insurance policy. In this article, we will discuss one such useful discount, a loyalty discount in Car Insurance. Take a look.




What is a loyalty discount?

A loyalty discount is a discount that is awarded to regular customers. In terms of Car Insurance, one can earn a loyalty discount while renewing the policy without switching to a new insurance company for a certain number of years. Meaning, you are awarded a special loyalty discount when you renew your car insurance policy from the same insurance company consecutively for a particular number of years.

Loyalty discounts can be of many types. You can get coupon codes, direct discounts, percentage discounts, or reductions on some additional charges. They can also be in the form of free services. Learn more in later sections of the article.

How do Car Insurance loyalty discounts work? 

To earn a loyalty discount, you must make the specified number of car insurance renewals from the same insurance company. Provided your insurer offers a loyalty discount, you can apply this discount while making payments for car insurance renewal. Here is how loyalty discounts work:

  • Understand the type of loyalty discount offered by your Car Insurance company.

  • Begin the process of Car Insurance renewal at least a week before the expiry. You can set the start date of your Car Insurance policy accordingly. 

  • Review the coverage, and find the "Apply discount" or "Apply code" field on the webpage.

  • Use the applicable method to get a loyalty discount.

If your insurance provider allows loyalty discounts, you will receive either a code through an email or SMS. Your insurer can help you apply the discount while renewing your Car Insurance policy.

Pros of Car Insurance loyalty discounts

Following are the common types of loyalty discounts that some auto insurance companies offer.

  • Percentage discount on premium

A certain percentage of the money will be waived off when you make the final payment for renewing your Car Insurance policy. This is a direct discount for being associated with the insurance company for a long time. 

  • Discounts on deductibles

Deductibles are a part of the claim amount that the policyholder bears. There are two types of deductibles, compulsory and voluntary. An insurance company can reduce the amount of deductible for being a loyal customer.

  • Free value-added services 

Car Insurance can have many value-added services like free towing, discounted repairs, fuel refill, free car check-up, and much more. You may receive any of such value-added services for free as a loyalty discount. You can use this service without worrying about the additional costs.

  • Claim-related discounts

An insurer may offer a discount on an increased premium after exceeding the number of allowed claims. Usually, premium increases when claims are made frequently as risk increases. This is where a loyalty discount can be helpful.

Pitfalls of Car Insurance loyalty 

Take a look at the following points to understand the cons of Car Insurance loyalty discounts. 

  • Lower coverage You may compromise on the coverage for getting a loyalty discount.

  • Others may offer better insurance cover

Other insurance companies might offer a better package on Car Insurance premiums and coverage.

  • Additional fees

Your insurance provider may charge a fee if you cancel the insurance policy.

Is it good to stay with the same car insurance provider for years? 

While it is good to stay with the same insurer for a long time and get loyalty discounts, you may also miss out on certain useful insurance deals. The insurance market is a competitive one, and thus, insurance products keep changing frequently. Nowadays, customer-centric insurance is the new and positive trend in the market. 

A customer-centric product is designed in such a way that the customer faces lesser hassle as compared to traditional insurance. More coverage, better services, and low prices are other advantages. You can stay updated by buying the most useful Car Insurance policy by switching the insurance company when you feel that better policies are available in the Car Insurance market. Thus, it depends upon the services and coverage that your insurer offers.

Also, read: How to Change/Switch Car Insurance Provider

Tips for choosing the right car insurance company

Choosing the right insurance company is as important as buying the correct Car Insurance policy. For example, sometimes, people may choose an insurer solely based on Car Insurance price. It can be counter-productive during claims. Here are a few tips on how to choose the right Motor Insurance company.

  • Look for adequate coverage

More coverage allows you to raise a claim for multiple situations. So, look for a Car Insurance company that offers more than the basic coverage.

  • The insurer must provide quality Car insurance services

Services like 24x7 customer care, breakdown assistance, query redressal, etc., are helpful in the time of need. For example, consider that your car has a breakdown and you are stranded on the road. The faster your insurance company responds and sends help, the better you can manage the situation. Also, look for other services like free vehicle pick up and drop facility (subject to availability) for a hassle-free experience

  • Check the reviews

You need to look for an insurer that is credible and reliable. You may want to check the reviews of other customers and their experiences before making a purchase. Social media is the best way to understand these reviews.

  • The premium should be on the lower side.

Even though the price is not the only factor for choosing an insurer, it can undoubtedly be one factor. You can select the insurance company based on the car insurance price after comparing insurers based on coverage, services, and reviews.

Frequently Asked Questions 

Here are some common queries related to Car Insurance loyalty discounts. Please feel free to contact us by sending an email to [email protected] in case you have any questions.



Will I lose the NCB if I apply for a loyalty discount?

No, you will not lose the NCB when you apply the loyalty discount. NCB is No Claim Bonus. It is applicable as per the rules suggested by IRDAI, and a loyalty discount is specific to a company. Both are different from each other. 

What would happen to my loyalty discount if I did not renew Car Insurance from my current insurance company?

You are likely to lose the loyalty discount when you switch Car Insurance companies.

Which is the best type of Car Insurance loyalty discount?

A loyalty discount can be of many types. For example, percentage discount on premium, discounts on deductibles, free value-added services, or claim-related discounts. The best type of loyalty discount depends upon what your need is. 

For example,

  • If you’re looking for a low-priced policy, then a percentage discount on the premium would be best for you.

  • If you declare deductibles, then discounts on deductibles will help.

  • If you own an old car and need value-added services, then the corresponding type of discount is the best.

  • Lastly, if you raise claims, then claim-related discounts are the best for you.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content and before making any insurance-related decisions.


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