Most auto insurance companies give discounts of 10-30% if you've been continuously insured for 6 months or more. If you don't own a car, buying an inexpensive non owner auto policy keeps you continuously insured and gives you liability protection when you borrow or rent a car.
Why do car insurance companies give continuous insurance discounts?
Insurance companies offer big discounts to people who have been covered by car insurance for a least 6 months because their data shows that these people have fewer accidents than people who have not had prior insurance.
Why? There are several reasons.
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First, brand new drivers won't have prior insurance, and they are more likely to get into accidents due to their inexperience. Second, drivers who get into lots of accidents or who frequently get tickets for breaking driving laws find that the price of their car insurance goes up quite a bit. Insurance can become so expensive that these people choose not to buy insurance, despite the laws requiring them to.
Overall, the risk pool of people who don't have prior insurance is skewed toward people who get into more accidents. And that means you'll pay a higher price if you buy a car and need car insurance if you haven't been continuously insured. Even if you don't present a higher risk, insurance companies have no way to know that. Getting an inexpensive non ower policy when you don't have a car keeps you eligible for continuous insurance discounts.
I've never heard of a continuous insurance discount. Does it have another name?
Yes, continuous insurance discounts may also be called a proof of prior insurance discount, or just "proof of prior". If you get a quote for car insurance, you likely won't be asked about it as a discount, you'll just get asked if you are currently insured, how long you've had insurance, and which company you're insured with.
Do I have to prove I've been continuously insured?
Sometimes, no, if the insurance company can look up your insurance status in a state database. Often, though, you'll be asked to send in a copy of your declarations page for your current policy. The declarations page is usually at the front of the documents you get from your insurance company and it has the list of the coverages, limits, and deductibles on your policy.
What happens to my continuous insurance discount if I don't send proof of prior insurance to my new auto insurance company?
If your car insurance company asks for a declarations page from your prior insurance company, you should send it in. If you don't, after a reminder or two, your discount will usually be removed all the way back to the first day of your policy. You'll get a bill for the increase.
If you'd like to read more about non owned car insurance, check out our guide to everything you need to know about non owner auto insurance.