Forbes Guide To Auto Insurance Discounts

Owning a car can be expensive. The average cost of owning and operating a new car was $773.50 a month in 2019, according to an AAA study.  AAA looked at six expenses: fuel, maintenance/repairs/tire costs, license/registration/taxes, depreciation, finance charges and car insurance. While you may not have much control over many of these, you may be able to reduce your car insurance costs.

One of the best ways to save on car insurance is to ask for discounts. The average cost of car insurance (including collision, comprehensive and liability coverage) was $1,062 per year in 2016, according to the National Association of Insurance Commissioners’ most recent report.

There are more than a dozen different types of common auto insurance discounts, and others that vary by insurance company. It’s well worth your time to ask your insurance agent to review the discounts you may be eligible for.

How to Look at Car Insurance Discounts

Before big savings like “40% off!” auto insurance start making you consider buying the better espresso machine after all, know this:

Beware of the “up to.” You’ll usually find that discounts are listed as “up to” a certain percent. You might not get that percent. The highest discount may be offered only to certain classes of drivers, for example.

Some discounts apply only to specific coverage types, not your entire bill. For example, seat belt discounts might be applied only to your cost for medical payments coverage or personal injury protection, because those types pay for passenger injuries.  Anti-theft device discounts might apply to only to comprehensive coverage, because that’s the coverage that pays for car theft.

Some discounts are required by state law. You’ll get state-mandated discounts from any insurance company. For example, New York mandates a 10% discount off of liability and collision coverage for three years for drivers who take a defensive driving course and send a certificate of completion to the insurance company.

Discounts can be capped. You might qualify for multiple discounts, but the insurance company usually limits the total possible discount percentage. For example, you might add up discounts that look like 75% off your auto insurance (hello new espresso machine!), but the total might be capped at 20%.

Not all discounts are automatic. You might have to ask for them, especially if you’ve had the same policy for a few years. Your insurance company may not know that you had an anti-theft device installed in your car, or that your student driver has excellent grades. The best way to save money on discounts is to ask your insurance agent on a regular basis to review your policy.

Discounts vary by state and insurance company. A discount you see mentioned on an insurance company website might not actually be available in your state.

What Kinds of Discounts Do Insurance Companies Give?

We looked at discount percentages when they were available from 11 of the nation’s largest auto insurance companies to find typical ranges. You may find higher or lower discounts from your own insurance company.

Multi-policy discount: This discount applies when you buy car insurance plus other policies from the same company. It’s also called a “multi-line discount” and commonly referred to as “bundling.” Bundling your car insurance and home insurance policies is usually one of the biggest discounts you can score, often between 5% to 25% off. But if you’re not a homeowner, don’t worry, you can typically bundle car insurance with other insurance policies, like condo, renters, motorcycle, boat, RVs and life insurance.

Multi-car discount: You can usually grab this discount if you insure more than one car with the same insurance company. Typical discounts are up to 8% to 25%.

Car safety discounts: If your car has safety equipment like anti-lock brakes, air bags and daytime running lights, you may get a discount. Daytime running lights are typically very small discounts, but air bag discounts for full-front seat air bags can be as much as 40% applied to your medical payments or personal injury protection coverage.

New car discount: Cars that are less than three years old can often qualify for a new car discount, often between 10% to 15%.

Anti-theft discounts: If your car has anti-theft features, you can typically get a discount up to 5% or 25% off your comprehensive coverage. Depending on the insurance company, you may be able to get anti-theft discounts for both factory installed and after-market installed devices.

About 41% of stolen vehicles are never recovered, according to the National Highway Traffic Safety Administration. Here are a few types of anti-theft devices that can help you recover a stolen car and potentially get you a discount:

• GPS based systems: Some cars are equipped with services like OnStar or Toyota’s Safety Connect, which utilize GPS to help locate the stolen vehicle. Some systems, like the OnStar “Remote Ignition Block,” can stop a car thief from restarting your vehicle.
• Stolen vehicle recovery systems: These types of systems, like LoJack, help law enforcement track and recover your stolen car by sending a silent radio signal to a transceiver installed in the car. Your car insurance company may offer a discount, but you’ll need to provide proof of installation.
• VIN etching: This is a permanent engraving of the vehicle identification number (VIN) on a car’s windshield and windows. It’s used as a deterrent against car thieves who would have to remove and replace VIN-etched glass before selling your car. Some car insurance companies not only offer a discount for VIN etching, but also could waive your comprehensive coverage deductible if your car is stolen.

Good driver discounts: Car insurance companies love good drivers and often reward them with savings. A car insurance company will typically require you to be incident-free for a certain amount of time. For example, if you haven’t had any accidents in five years, Geico offers up to 26% in potential savings. If you haven’t had any accidents, car insurance claims or traffic violations, you could qualify for a discount. Good driver discounts often range between 10% to 40%.

Defensive driver discounts: Some insurance companies will give you a discount if you’re willing to take an approved defensive driving course. But keep in mind, this discount may only apply to qualified drivers of a certain age, typically 50 or older. Defensive driver discounts typically range between 5% to 10%. Some states mandate this discount.

Good student discount: If you or your student driver is enrolled full-time at a high school or college and meets certain requirements, you could qualify for a discount. Car insurance companies typically require the student to maintain at least a B average and be age 16 to 25. We found good student discounts ranging between 8% to 25%.

Students away at school discount: If your student is away at school and without a car, you may be able to get a discount. Requirements vary among car insurance companies, but the student typically has to be under age 25, more than 100 miles from home and with access to your car only while home during school vacations and holidays.

Pay in full discount: If you pay your full-term up front, car insurance companies typically offer a discount such as 10%.

Electronic Funds Transfer (EFT) discount: If you pay in installments, you may be able to get a small discount for using automatic withdrawals.

Paperless discount: If you’re willing to go paperless, you’ll get your policy documents and billing electronically. The insurance company may offer a small discount.

Online quote discount: Some car insurance companies will offer a discount if you get an online quote and sign up for a policy. This can range from 4% to 12%.

Occupational discounts: Depending on your occupation, you might qualify for discounts. For example, Liberty Mutual offers educators special policy features and Geico offers up to 15% off for military personnel. It’s a good idea to ask your insurance agent if your occupation qualifies for a discount.

Alumni associations and professional organizations: This might include college alumni associations, fraternities, and sororities, and professional organizations (like your state’s bar association or a union).

Usage-based insurance program discount: Your insurance company might offer usage-based insurance (UBI), which adjusts insurance premiums based on how often and how well you drive. Data is typically collected using a device installed using your car’s ODB-II port or collected from a smartphone app. Most UBI programs offer a discount for enrolling (between 5% to 10%) and then a discount based on your driving habits. The discount is typically applied at policy renewal time. If you’re a good driver, a typical UBI discount could be anywhere between 5% to 40%.

Note that a UBI discount might not apply to your entire policy.

Here are some examples.