These days, auto insurance companies offer dozens of enticing discounts for prospective policyholders. In the hyper-competitive market for insurance coverage, these discounts are designed to attract policyholders to agents and direct-sales representatives. Every year, millions of new insurance customers sign up for "discounted" policies thanks to these slick marketing tools. Of course, it's not entirely clear that these so-called discounts actually save money for the drivers who take advantage of them. In many cases, these discounts may simply serve as a reduction mechanism for already-inflated premiums.
When you solicit a rate quote from an auto insurance provider, you'll have to provide certain pertinent demographic and historical information. Once you've done this, you'll be notified about your eligibility for various discounts. Depending upon the answers that you've provided to the questions that you've already been asked, these discounts may vary widely. If you're under a certain age and currently attend school, you may be eligible for a student discount. If your driving record is pristine, you may qualify for a "good driver" discount.
Since the insurance business is highly competitive, most insurance companies prefer to issue policies on the spot. In other words, you can simultaneously solicit a rate quote and receive a policy based on the information that you've provided. If you sign up for your policy online, you can immediately print your insurance documents for safekeeping in your vehicle. Once you've paid, you can move on to your next task for the day.
Of course, your insurance company will double-check all of the information that you've provided in your application. This investigation tends to be very thorough: Your provider will take the time to check on your enrollment status with the educational institution that you claimed to be attending and may run a comprehensive license check with the motor vehicle bureau of each of the states in which you've lived. Even if you've already paid for your policy, your provider's official acceptance of your coverage terms and premium rates will depend upon the outcome of this investigation.
If your provider's investigation turns up any inconsistencies in your self-reported answers, you may face serious consequences. If you've misrepresented your driving history, it's likely that your provider will upwardly adjust your policy's rate and ask you to pay the difference. If you've misrepresented your educational history, your provider will wipe out your student discount and may cancel your policy. In either case, any claim that you file is likely to be denied.