Buying car insurance is never very fun, and that's especially true if you're someone who has never had to use their policy. But, even if you feel like you're throwing your monthly premiums down the drain, you'll be immensely grateful you have coverage if you're in an accident or you hurt someone or damage property while driving.
Either way, the best way to protect yourself against overpriced auto insurance involves shopping around for a policy, comparing prices among at least three or four insurers and making sure you're only paying for the types of coverage you need the most.
You should also know about car insurance discounts you may be eligible for. Since many of the most popular auto insurance discounts are not obvious or advertised, you may need to inquire with your insurer to see if you qualify.
Types of Car Insurance Discounts
Which car insurance discounts should you ask about? And which ones can lead to the biggest savings? The list below explains the best car insurance discounts out there, who can qualify and how much you might be able to save.
Passive Restraint Discount
This type of discount is available for drivers who have a car with factory-installed air bags, seat belts, or another passive restraint system. While the amount of any potential discount can vary, State Farm says having this equipment saves their customers up to 40% off their Medical Payments coverage.
Full Payment Discount
You can also pay less for auto insurance if you're willing to fork over the cash to cover six months of premiums at once instead of making monthly payments toward your policy. This discount has the potential to save you 10% or more, although your savings will vary depending on your company.
Electronic Funds Transfer (EFT) Discount
In addition to scoring discounts for paying for your entire policy in full and upfront, you can also save another 2% to 3% off your premiums for using an Electronic Funds Transfer (EFT) or even a payroll deduction to foot the bill.
New Customer Discount
Being a new customer can also help you secure lower auto insurance rates — at least at first. This is part of the reason you can save so much just by being willing to change insurance companies every few years.
Low mileage discounts
If you're an infrequent driver or someone who doesn't put a lot of miles on their car, you should make sure you're not overpaying for coverage you barely use. Look for an auto insurance provider who offers discounts for low mileage, and you may be able to pay less when you drive less.
No DUI Insurance Discount
If you don't have a DUI, you will be in the best possible position to qualify for lower car insurance rates and other available discounts.
Early Quote Discount
Getting an early quote for auto insurance can also lead to savings, although your discount can vary. If you sign your policy at least seven days before it becomes effective, you can also qualify for a discount known as an "early signing discount."
Anti-Theft System Discount
Having an anti-theft system can make it considerably more difficult for thieves to vandalize or steal your car. Auto insurance companies are willing to offer discounts for this type of equipment as a result. With GEICO, for example, your savings for an anti-theft device can be as much as 23%.
New Vehicle Discount
Having a new vehicle can also help you qualify for lower car insurance rates. With Travelers, your discount for having a newer model vehicle can help you save up to 10% off your auto insurance policy.
Good Driver Discount
Being a "good driver" in an insurance company's eyes typically means you have been accident-free for at least five years. This is excellent news for insurers since you pose much less of a risk and have a proven driving history, and you can save more than 20% off your auto insurance premiums as a result.
Defensive Driver Discount
If you have taken a defensive driving course, you're in a great position to save money on car insurance. With Travelers, for example, taking a driver education course can help you save up to 8% off the total cost of a policy.
Multi-Policy Discount
You can also save money with any insurer by having more than one type of insurance bundled together. For example, you can score savings if you have an auto insurance policy and a homeowners insurance or renter's insurance policy with a single company.
Multi-Vehicle Discount
You can also score a "bulk discount" on your auto insurance by insuring more than one vehicle within a single policy. Your discount will vary depending on how many vehicles you insure, the types of coverage you need, your coverage limits and other details.
Good Student Discount
You can also save money by qualifying for a smart student or good student discount, although the terms and conditions for these discounts vary from company to company. With Allstate, smart student discounts go to unmarried students who are under the age of 25 and have grades that average a B- or better or a GPA of 2.7 or above. However, students can also qualify by completing a teenSMART driver education program or attending school at least 100 miles away from where their car is stored.
Military Discount
You may also be eligible for a military discount if you are currently active duty military, you're retired from the military, or you're a member of the National Guard or the Reserves. A military discount can help you save up to 15% on some types of car insurance coverage depending on your insurer.
Federal Employee Discount
Being a federal employee can also help you save money with some insurers. For example, GEICO offers an Eagle Discount of up to 12% off insurance premiums for active and retired federal employees who are eligible for the program.
How to Shop for Auto Insurance and Score Big Discounts
If you are shopping for your first auto insurance policy ever, you'll want to spend some time thinking about the types of coverage you want. For example, you may only need liability coverage if you're driving an older car infrequently, but you could be better off with full, comprehensive coverage if you're driving a newer car or you want the most robust auto insurance protection money can buy. Generally speaking, your best first step involves learning about the types of auto insurance coverage and how they work.
If you have auto insurance already but you believe you could be paying too much, you're probably right. In this case, you should know you can easily change auto insurance providers altogether — even if you're in the middle of a policy you already paid for. If you do switch coverage once a policy is already underway, you'll need to pay for your new coverage to begin, but you can expect a refund of the unused portion of your old policy.
Whether you're buying new coverage or looking to switch insurers, here are some additional tips that can help you save big on auto insurance premiums:
- Bundle all your policies with one insurance company. You probably need to purchase more than one type of insurance anyway, and you can save money by choosing one insurance provider to meet all of your needs. As you shop around for car insurance, consider getting quotes for other policies you have such as boat insurance, homeowners insurance, or renter's insurance.
- Score all the "easy" discounts you can. Look for simple ways to save that could help you reduce premiums with minimal effort. For example, opt for paperless billing or sign up to have your monthly premiums automatically charged to a credit card.
- Opt for a higher auto insurance deductible. You can also save money on auto insurance by choosing a higher deductible for your policy. Just make sure you choose a deductible amount you could actually afford if you need to file a claim.
- Consider insurance-based apps that let you save based on driving habits. Some insurance companies let users sign up for apps that track their driving habits and offer discounts as a result. Examples include Allstate DriveWise and the IntelliDrive Program from Travelers.
- Shop around and compare quotes from several insurers. Finally, the most important step you can take to save on auto insurance is shopping around and comparing quotes. You may find one insurance company offers similar coverage than their competitors for much lower premiums, but you'll never know unless you check.
Why Do Insurance Companies Offer Discounts?
Auto insurance companies base pricing for their policies on an array of important factors such as your age, your gender, your driving record, and even your credit score. They do this by using actuarial data and advanced algorithms to determine how much risk you pose as a driver, as well as how much various scenarios might cost if you file a claim.
Auto insurance discounts come into play when a specific factor could help you pose less risk as a driver. For example, someone with a good driving record and no accidents is less likely to get into an accident in the future. Meanwhile, someone who has taken a defensive driving course could also pose considerably less risk.
Other factors like good grades, a good credit score, or an anti-theft system on your car could also help the insurer lower their risk for insuring you, so it's only natural you can pay less for coverage.
How Can I Get a Discount On My Car Insurance?
Since there are so many car insurance savings opportunities out there, chances are good you'll qualify for at least a handful of available discounts. However, you'll need to spend some time shopping around among auto insurance carriers to find out which discounts you're eligible for and how much they can lower your premiums.
With this being said individuals should be careful not to shop for auto insurance based on discounts alone. The key to savings is not the discounts, but the final price, a company that offers few discounts may still have a lower overall price.
