How to Save Money on Car Insurance: A Guide to Discounts
Car insurance is a necessary expense, but there are ways to lower your premiums. Insurance companies offer a variety of discounts to help you save money without sacrificing coverage. These discounts can offset the rising costs of insurance, fuel, and car repairs. To ensure you’re getting all possible savings, it’s a good idea to speak with your auto insurance agent regularly and ask for a comprehensive review of available discounts.
Understanding Car Insurance Discount Types
We’ve analyzed discount percentages from several major auto insurance companies to find the typical savings you can expect. Keep in mind that your own insurance company’s offerings might vary.
- Multi-Policy Discount: This discount, also called a “multi-line discount” or “bundling,” often applies when you purchase car insurance and other policies from the same company. Bundling auto and home insurance commonly provides significant savings, frequently in the range of 5% to 25%. If you don’t own a home, you can typically bundle car insurance with other policies such as condo, renters, motorcycle, boat, RV, or even life insurance.
- State Farm is known to offer excellent bundling discounts for home and auto insurance, with an average 23% discount. American Family and Farmers also provide competitive discounts.
- The table below provides a snapshot of multi-policy discounts by company.
Multi-Policy Insurance Discounts by Company
*USAA auto insurance is available to veterans, military members and their families.
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Multi-Car Discount: If you insure multiple cars with the same insurance company, you can usually qualify for this discount, with potential savings of up to 8% to 25%.
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Vehicle Safety Discounts: If your car is equipped with safety features like anti-lock brakes, airbags, or daytime running lights, you may be eligible for a discount. Discounts for daytime running lights are usually small, but airbag discounts, particularly for full-front seat airbags, can be significant, potentially up to 40% applied to your medical payments or personal injury protection.
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New Car Discount: Cars that are less than three years old are often eligible for this discount, typically ranging from 10% to 15%.
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Anti-Theft Device Discounts: If your car has anti-theft features, you can typically get a discount on your comprehensive coverage, ranging from 5% to 25%. Companies may offer discounts for both factory-installed and aftermarket devices.
- The National Highway Traffic Safety Administration (NHTSA) reports that approximately 41% of stolen vehicles are never recovered. Anti-theft devices increase the chances of recovery and often trigger discounts.
- Here are common types of anti-theft devices:
- GPS-based systems: Services like OnStar or Toyota’s Safety Connect utilize GPS to help locate stolen vehicles. Some systems, like OnStar’s “Remote Ignition Block,” can even prevent a car thief from restarting your car.
- Stolen vehicle recovery systems: Systems such as LoJack help law enforcement track and recover your stolen car by sending a silent radio signal to a transceiver installed in the car. Note that you’ll need to provide proof of installation.
- VIN etching: Permanent engraving of the vehicle identification number (VIN) on the windshield and windows serves as a deterrent to car thieves. Some insurance companies offer discounts or even waive your comprehensive coverage deductible if your vehicle is stolen.
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Good Driver Discounts: Insurance companies reward safe driving habits with discounts. Maintaining a clean driving record for a specific period qualifies you for this discount. Savings can range from 10% to 40%.
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Defensive Driver Discounts: Completing an approved defensive driving course may qualify you for a discount. This is often required for drivers of a certain age, typically 50 or older, and the discounts usually range from 5% to 10%. Some states mandate this discount for mature drivers.
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Good Student Discount: Full-time students in high school or college may qualify for a discount if they meet specific requirements, such as maintaining a B average. These discounts can range from 8% to 25%.
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Student Away at School Discount: If your student goes to school without a car, you may qualify for a discount. Requirements vary by insurance company, but typically the student must be under 25 and more than 100 miles from permanent residence.
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Pay-in-Full Discount: Paying your full policy term upfront often results in a discount. Top companies offer discounts in the range of 6% to 14%. You also avoid monthly finance or service fees.
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Electronic Funds Transfer (EFT) Discount: Some insurers offer a small discount, ranging from 3% to 6%, for paying premiums through automatic withdrawals.
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Paperless Discount: Opting for paperless billing can result in a small discount, typically around 3% on average, but with a range from 1% to 6% with different companies.
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Online Quote Discount: Getting an online quote and signing up for a policy can get you a discount, generally between 4% and 12%.
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Early Bird Discount: Buying your policy in advance of your current policy’s expiration date might qualify for a discount. The discount typically ranges from 2% to 15% and requires purchasing a policy 7 to 14 days in advance. Discounts of up to 10% are available with some companies if you purchase 10 days in advance.
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Occupational Discounts: Depending on your occupation, you may qualify for special discounts. Educators and military personnel often find special offers available to them.
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Alumni Associations and Professional Organizations: Discounts vary in this area, but often alumni associations, fraternities and sororities and professional organizations (such as a state bar association or a union) all offer discounts.
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Usage-Based Insurance (UBI) Program Discount: UBI programs adjust insurance rates based on your driving behavior. Data is collected using a device installed in your car or through a smartphone app. Most UBI programs offer an enrollment discount (5% to 10%) and a discount based on your actual driving habits. If you’re a good driver, UBI discounts can range from 5% to 40%. It’s important to note that rates could increase if your driving score is poor.
Expert Tips for Maximizing Car Insurance Discounts
This advice comes from industry experts:
- Beware of the “Up To”: Understand that advertised “up to” discounts may only apply to certain drivers or may have other limitations.
- Some Discounts Don’t Apply to the Entire Bill: Certain discounts like seat belt discounts may only apply to specific coverages, such as medical payments or personal injury protection.
- Some Discounts Are State-Mandated: You will automatically receive state-mandated discounts from any insurance company. For instance, New York gives a 10% discount on liability and collision coverage if drivers complete a defensive driving course.
- Discounts Can Be Capped: While you may qualify for multiple discounts, the company may cap the total percentage you receive. For example, a 75% total discount may be limited to 20%.
- Not All Discounts Are Automatic: If you’ve been with the same policy for a few years, you might not have all applicable discounts. It’s important to ask your agent regularly about available discounts.
- Car Insurance Discounts Vary by State: Discounts offered by insurers vary by the state. Check with your insurance agent to identify the discounts specific to your area.
In conclusion, taking the initiative to learn about car insurance discounts is a strategic move to lower your premiums. By understanding the various discounts available and actively engaging with your insurance agent, you can find significant savings without compromising your coverage. Remember to regularly reassess your eligibility for all applicable discounts to ensure you’re securing the best possible rates for your situation.
