Owning a car is one of the biggest expenses in most budgets. According to a recent study by the American Automobile Association (AAA), it averages almost $800 per month. This total includes fuel, maintenance, financing costs and insurance. Most of those are things you can’t control. If you need new tires, you quite simply have to buy them. However, insurance is one you can. If you take advantage of the discounts available to you, you could reduce your monthly insurance premium by a significant amount. Here are some of the discounts car insurance companies offer that might make it possible for you to lower your costs.
Discounts for doing more business with a single insurance company.
- Multi-policy discount: Do you own a home, rent an apartment or carry life insurance? If you do, you could qualify for a multi-policy discount. This is often referred to as bundling. This discount applies when you purchase your car insurance along with other policies from the same provider. This is typically one of the biggest auto insurance discounts. It can reduce your premium by up to 25 percent. It makes sense to shop around to find the best overall bundling deal for your personal situation.
- Multi-car discount: Do you own more than one vehicle? If you insure them with the same company, you could save between eight and 25 percent on your premiums. The final amount depends on the number of vehicles, models, age and other factors.
- Vehicle safety discounts: If your car is equipped with safety equipment, you may qualify for discounts. This could include things like anti-lock brakes, air bags and daytime running lights. Some of them are relatively small. However, the ones for things like full-front seat air bags can be significant.
- Discounts related to the age of your car: Vehicles that are less than three years old (even used ones) often qualify for a discount of between ten and 15 percent. The reason insurers offer this discount is because newer cars usually have better safety features and are more dependable.
- Anti-theft discounts: If your vehicle has anti-theft features, you could qualify for a discount of between five and 25 percent off your comprehensive coverage. The final amount depends on the number and type of features. Some insurance companies offer these discounts for both factory and after-market installed anti-theft devices. That means you could add them to any preowned vehicle you purchase and potentially qualify for a reduction in the price of your insurance. In addition to offering discounts, some providers might waive a deductible if your car is ever stolen and it’s equipped with theft recovery devices. Examples of anti-theft devices include GPS technology like OnStar, stolen vehicle recovery systems like LoJack and VIN etching, which involves permanently engraving your vehicle identification number on your car’s windshield and windows.
Discounts for safe driving.
- Good driver discounts: Auto insurance companies prefer to cover good drivers. That’s because they take fewer risks and are involved in fewer accidents. They usually reward them with savings. In order to qualify, you will have to be incident-free for a certain amount of time, usually three to five years. Good driver discounts usually range between ten and 40 percent, depending on your driving record.
- Usage-based insurance (UBI) program discount: Your insurance company might offer discounts based on how often and how well you drive. Information about these things is collected using a device installed in your car’s ODB-II port or from an app on your smartphone. If you’re a good driver, your discount could range from five to 40 percent. Be aware: If the UBI device collects data that indicates you’re a bad driver, it could end up costing you.
- Defensive driver discounts: Some insurers will provide a discount if you take an approved defensive driving course. This usually applies to qualified drivers 50 years of age or older. Defensive driver discounts are typically between five and ten percent. Some states mandate this discount. You can check online to find out if your state does.
- Good student discount: If you or a driver on your policy is enrolled full-time at a high school or college and meets certain requirements, you could qualify for a discount. Car insurance companies usually require that a student be between 16 and 25 years old. The also must maintain at least a B average. This discount usually caps out at 25 percent. Insurance adjusters find that students with good grades are usually safer and better drivers.
- Students away at school discount: If your student goes to school away from home and does not have a car, you may be able to get a discount. Requirements vary depending on the insurer, but the student typically has to be under age 25, go to school more than 100 miles from your residence and only use the car while at home during school vacations and holidays. This is essentially a discount for limited use of the vehicle, which makes it less likely it will be involved in an accident.
- Senior driver discount. People over the age of fifty can qualify for lower insurance rates because insurers consider them safer and more experienced drivers. This discount is dependent on maintaining a clean driving record.
Discounts related to payments and doing business online.
- Pay in full discount: If you pay your annual premium up front in full, car insurance companies usually take about ten percent off the cost of your premium.
- Electronic funds transfer (EFT) discount: If you set up automatic payments for your monthly premiums, you may earn a small discount.
- Paperless discount: Your insurance company will likely provide you with a small reduction in premiums if you sign up to go paperless and agree to receive your insurance documents and billing online.
- Online quote discount: Certain auto insurance companies will give you a take money off if you get an online quote and sign up for a policy. This discount usually caps out at around ten percent.
- Occupational discounts: Depending on your occupation, you might qualify for discounts. These usually come from companies that specialize in insuring people in that industry. These policies are often offered through industry organizations.
- Alumni association discount: Your college alumni association might offer auto insurance discounts. Check their website to find out for sure.
One other important factor: Some discounts apply only to certain types of coverage, not your entire premium. For example, seat belt discounts might be applied only to your personal injury coverage. That’s because it covers injuries, which seat belts help prevent. It would likely not impact your collision coverage.
Also, discounts can be capped. You may qualify for multiple discounts, but insurance companies usually limit the total possible discount to a certain percentage of your premium. For example, you might think you qualify for discounts that add up to 80 percent off your auto insurance, but the insurer might limit the total to 25 percent.
Many insurance providers don’t apply discounts automatically. You have to ask for them. It’s worth it to check your coverage not just when you buy a car, but also when any aspect of your life changes. Most companies will provide you with discounts if it makes it likely you’ll move your business to them.
Dont forget: Check with your used car dealer. The insurance they offer is often priced fairly. They also offer most popular types of discounts.