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AAA insurance's pricing model gives long-term customers discounts that increase over time
by HillaryBriss 9y ago
AAA insurance's pricing model gives long-term customers discounts that increase over time
- danans 9y agoCar insurance is required by law and home insurance by many mortgages, so for those types of insurance, initial rates for a given coverage level should be uniform since demand and supply are understood quantities. Instead, they market policies on ancillary benefits, like roadside assistance, home warranties, etc. Discounts for long term and importantly, low risk customers, are a way of securing future revenue by disincentivizing customers from shopping for lower rates elsewhere.
- rmason 9y agoI've actually had AAA for my car insurance for a dozen years. Only had very small price increases during that time. No accidents, no tickets and yet they just increased my rate 25%. Been happy with them but if they think that I don't pay attention to the price I'm paying they'll learn.
- vkou 9y agoSo, they'll lose their 5% margin on you. If your odds of noticing the bump, and caring enough to drop them were <80%, they still made money.