Which Multi-Car Insurance Policy Is Best for Me?

According to the Bureau of Transportation Statistics, we own about 2 cars per household in the US. Many families have several cars parked in the driveway. What’s the best insurance strategy for multi-car households? The answer depends on several factors, including who drives and who owns the vehicles. But often, you’ll save money with a multi-car insurance policy rather than insuring the cars separately.

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Save money with a multi-car insurance policy

Figures from the National Association of Insurance Commissioners put the average cost of car insurance at just under $1,200 nationally. Costs vary by state. But the coverages you choose also play a role in car insurance costs.

Using the national average, insuring 2 cars could cost $2,400. Insuring 3 or more cars can reach costs much higher.

However, if you combine coverage with a multi-car insurance policy, you can save money in most cases. Insurers often offer a multiple-car discount that can reduce the overall cost of coverage. In some cases, this discount can save up to 25% as advertised by some insurance providers.

But headline savings aren’t everything. A variety of rating factors determine auto insurance premiums. In addition, one insurer might weigh risks differently compared to other insurers. This means that an insurer that advertises a higher discount may not always have the lowest overall premiums.

Like many financial purchases, it pays to shop around for car insurance to find the best rates for your specific situation.

Multi-car discounts aren’t the only way to save money on insurance. Your household might qualify for other common discounts as well.

  • Safe driver discount
  • Multi-policy discount
  • Accident-free discount
  • Low-mileage discount
  • Defensive driving discount
  • Military or federal employee discount
  • Senior driver discount
  • Good student discount
  • And more

The most significant insurance savings in terms of percentages often center on multi-car, low-mileage, and multi-policy discounts. But smaller discounts help as well. It all adds up.

Comparing multi-car discounts

Insurance rules vary by state, governing many parts of your policy. But insurers can set their own discounts for multi-car policies. Discount percentages vary by insurer and can range from single-digit percentages up to 25%.

It’s important to look at the big picture, however. A 20% discount offered by a company that’s 35% higher than competitors might not translate to savings.

Still, some insurers offer impressive headline savings:

  • GEICO lists savings of up to 25% for multi-car coverage.
  • State Farm shows savings up to 20% for multi-car policies.

If you’re insuring 2 or even 3 or more vehicles, the savings can be significant. But there are some situations in which it might make sense to keep separate policies.

Reasons you might not want a multi-car insurance policy

A multi-car policy offers a powerful way to save for households with more than 1 vehicle. However, it may not be the best solution for every family.

Here are some situations in which you might choose a different strategy:

  • A car is titled to someone else. Auto insurance works on the concept of insurable loss. In short, you can’t insure against a loss that isn’t yours. For example, if you have a roommate or unmarried partner and they have a car in their name, that car can’t be insured on your policy. The same is (technically) true of young drivers that have their own vehicle. If your son or daughter comes home one day with a new car titled to them, the new vehicle should have its own policy.

  • A driver in your household has a spotty driving record. Each insurer rates risks differently. So, an insurer that offers great rates for a perfect driving record might not offer great rates for a less-than-perfect driving record. In some cases, it may make sense to split the coverage between 2 policies.

  • A spouse has poor credit. In most states, insurers can use credit history as a rating factor for auto insurance premiums. If someone named on your policy has a spotty credit history, splitting your auto insurance coverage between 2 insurers may make sense.

  • You own a classic or collectible car. Classics and collectibles often benefit from a different type of insurance policy that better safeguards the car’s full value. If you own a classic or collectible car, consider insuring that car separately with a specialty policy.

Benefits of a multi-car insurance policy

Cost savings and simplified billing are 2 primary benefits of a multi-car policy. You’ll often save hundreds of dollars per year compared to the cost of maintaining 2 separate policies.

The way the discount works, each car gets a multi-car discount. However, the discount isn’t cumulative. Instead, each vehicle receives a fixed percentage discount on key coverages. If the insurer you choose offers a 10% discount, each car on your policy sees a 10% discount. But if you have 3 cars, you won’t get a 30% discount.

You’ll also enjoy simplified billing. All the vehicles on your policy share the same renewal date, and you can pay for all your car insurance with 1 bill. You can even earn additional discounts for setting up automatic payments or paying in full with many insurers.

As an additional benefit, all the vehicles on your policy can share the same deductible per occurrence. If a branch falls in a storm damaging 2 cars in your driveway, you may only have one deductible.

But be aware that insurers look at people who live in the same household when determining eligibility. For example, if your college-age student is away at school, they can remain on your policy if your home is still their address. Once kids move out on their own, they will need their own policy in most cases.

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Multi-car insurance limitations

Rules vary by insurer, but many insurers limit the number of drivers and cars per policy. For larger families, this could mean you may need multiple policies.

Typically, insurers allow up to 4 cars and 4 drivers per policy. However, some insurers allow 5 vehicles per policy. If you have more than 4 cars or drivers, you may need to split your coverage between 2 policies.

Assuming all the drivers qualify for coverage, you can have both policies with the same insurer if you need to split your coverage into 2 policies. In this case, it may make sense to assign 2 or more cars to each insurance policy so you can earn a multi-car discount on each policy.

However, some insurers allow you to earn a multi-car discount on 2 policies automatically. For example, if you have 4 cars on the first policy and 1 car on a second policy, you can earn a multi-car discount on both policies. Again, rules vary by insurer, so be sure to ask before making a decision.

You can also split the coverage between 2 different insurers. For example, if you have 5 cars but your insurer only allows 4, you can start a new policy with another provider. This structure can even be a cost-saving strategy. Another insurer may offer more favorable rates for younger drivers or drivers with a spotty driving record.

As your family and auto fleet grows, splitting coverage can be an effective way to save on auto insurance while still enjoying a multi-car discount.

Customize your multi-car policy

With a multi-car policy, you can still customize many parts of your coverage. However, some parts of your coverage will apply to all vehicles or drivers.

Coverages that apply to all vehicles on your policy:

  • Liability: Your policy protects against liability for auto-related injuries caused to others as well as damage caused to the property of others. The liability limits you choose apply to all drivers on your policy. Coverage is per occurrence on standard policies. So, if driver 1 has an accident and driver 2 has an accident a month later, both claims can use the full liability limit.

  • Medical: Your policy may have either Med Pay or Personal Injury Protection (PIP). These coverage options pay for auto-related injuries caused to you or your passengers. All drivers on your policy share the same coverage.

  • UM/UIM: Uninsured motorist protection (UM) and underinsured motorist protection (UIM) cover losses caused by other drivers with no insurance or not enough insurance. These coverage types also apply to all drivers and vehicles on your policy. Some states allow these limits to be stacked, which can increase your coverage limits.

However, you can customize other types of coverage on a per-car basis.

Coverages you can customize for each car:

  • Collision coverage: For older cars, you might not want to carry collision. You can choose which vehicles get collision coverage.

  • Comprehensive insurance: Your comp coverage protects against non-collision losses, such as fires and theft. Similar to collision coverage, you can assign comp coverage to individual vehicles on your policy.

  • Rental reimbursement: If you have full coverage, you’ll also have the option to add rental reimbursement coverage to your policy. This coverage is triggered if you have a covered claim and your vehicle is unavailable while being repaired. However, you may not need this option for all vehicles. You can choose which cars you want to have coverage.

Can I insure a motorcycle or boat on the same policy?

Motorcycle and boat policies use a different structure than auto policies. While you can often insure your motorcycle or boat with the same insurer you use for your auto policy, you can’t put these risks on your auto insurance policy. Owning a motorcycle or a boat won’t help you qualify for a multi-car discount.

However, many insurance companies offer discounts for buying more than one type of policy. So, you may be eligible for a multi-policy discount.

Shop for multi-car insurance for your family

A multi-car policy can offer substantial savings, but rates and discounts can vary from one insurer to another. The best way to find the lowest rates for your household is to compare quotes from multiple insurers.

By combining coverage with multi-car insurance, you’ll often save money. You’ll also benefit from more convenient billing and easy-to-manage coverage – and you can still customize your coverage for each vehicle you own.

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Ensure you are getting the best rate for your insurance. Compare quotes from the top insurance companies.

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