Auto Insurance Basics

Car Insurance Discounts

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Auto insurance discounts fall into four types: Driver Saftey, Driver Status, Policy, and Vehicle. We'll explain which ones are automatically applied when you get a quote, which ones require driver initiative, and show drivers how to get them and save on their car insurance rates. We also discuss usage-based discount programs offered by some companies.

Table of Contents

Driver Safety Based Car Insurance Discounts

These types of car insurance discounts reward drivers for their good driving habits. These are the most common across insurers, and make up a sizeable chunk of consumers' savings on car insurance rates.

Discount Name

Companies That Offer Discount

Defensive Driving

State Farm, GEICO, Allstate, Travelers, Nationwide, Progressive, Farmers

Accident Free

State Farm, GEICO, Allstate, Travelers, Nationwide,Progressive, Farmers

Safe Driver

State Farm, GEICO, Allstate, Travelers, Nationwide, Progressive, Liberty Mutual

Low Mileage

State Farm, Allstate, Travelers, Nationwide, Progressive

Defensive Driving Discount (10% to 15%)

Drivers who take defensive driving lessons from a certified or registered school will be qualified for a 10 - 15% on their liability, collision, and personal injury or medical payment coverages. Classes teach drivers how to better assess road, traffic, and weather conditions to avoid collision accidents. One place to find classes is through the National Safety Council, which offers online defensive driving lessons certified by most states. Some companies automatically ask whether you've taken defensive driving lessons when quoting your rate, but you can even get the discount in the middle of your policy. Lastly, before signing up for the lesson, check with your insurer to see if they require being a senior citizen to be eligible for these reductions.

This table below shows how much classes can cost at two national schools, and the amount of a discount using GEICO as an example. Savings are calculated based on average insurance expenditure per the NAIC.

State I Drive Safely American Safety Council Sample Discount Average Premium Estimated Savings
California $19.95 $19.95 5% $745.55 $37.28
New York 29.95 24.95 10% 750.63 75.06
Pennsylvania 30.00 19.95 10% 488.19 48.82
Delaware 14.95 12.95 15% 748.55 112.28

Accident Free and Good Driver Discounts

Companies like Allstate, GEICO, State Farm and most others offer good driver discounts if you have been accident-free for three to five years. This discount is usually automatically applied. If you do not qualify at sign up, you will be able to adjust your premium if you have stayed accident-free for their required time period by the time of your next renewal. The definition of a 'good driver' may change slightly between companies so check with your agent to find out what your insurer’s definition is for Good Drivers.

Safe Driver Discount (10%)

Safe Driver discounts are given to motorists for conservative habits such as having all passengers wear seatbelts, low driving speeds, less aggressive braking, etc. We have seen insurers discounting liability and collision auto insurance premiums by about 10% and higher for these good driving habits. For many insurers, safe and good driver discounts are the same, with the exception of GEICO and Allstate who distinguish between the two and offer them as separate discounts. Companies like Progressive and Allstate also usually monitor safe driving via their Snapshot and Drivewise programs which we discuss more below.

Savings for Low Mileage and Usage (varies, up to 20%)

If you don't use your car often, you may qualify for a low mileage usage discount. Whenever you get a quote, insurers will ask about your average annual mileage. The average person drivers around 12,000 miles per year, but those who drive less than 7,500 can see some great discounts. Safeco offers a discount as high as 20%. In order to qualify for this discount at certain companies however, you will have to sign up for their driver monitoring technology. For example, Progressive's Snapshot and Allstate's Drivewise program, which we discuss more below.

Driver Status Based Car Insurance Discounts

These are discounts that are based on the driver, just not on their driving habits. Whether your child is a good student, or you served in the military, your personal profile can be key to saving a good amount on your car insurance.

Discount NameCompanies That Offer The Discount

Good Student

State Farm, GEICO, Allstate, Travelers, Nationwide, Progressive, Liberty Mutual

Student Away

State Farm, Allstate, Travelers, Liberty Mutual, Farmers, Nationwide

Military

GEICO, Esurance, USAA

Professional

GEICO, Farmers, Travelers, Nationwide, Liberty Mutual

Senior

GEICO, Allstate, Liberty Mutual

Good Student Discount (5% - 25%)

Being young always causes rates to be very high before you turn 25. If you maintain a B average however, you can qualify for savings as high as 25% in discounts. You just need to be a full time student and provide proof of your scholastic records to your insurance company. We go more in-depth about this discount here.

Away-From-Home Student Discount (5% - 25%)

Parents can save on their policy if your child driver left their car at home when they went to college, and said college is located more than 100 miles away from home. You may ask your agent right away or check on your next renewal that your child is 100 miles away from home and does not have access to the car. This should show a significant reduction in your liability coverage, as we have seen as much as 25% savings on premiums.

Professional & Academic Organizations, Employee Discounts (2% - 10%)

Most insurance companies have affiliations and partnerships with other organizations that provide their members or employees with additional discounts for insuring their vehicles. These tend to be trade or professional organizations and university alumni groups. GEICO currently partners with 500+ professional and university organizations whose members may earn membership discounts upon buying a policy. Here is their list of affiliated organizations. For these members, GEICO offers a 3% discount on the total policy premium.

Senior/Mature Driver (5% - 10%)

Drivers above the age of 55 may qualify for additional premium reductions in the form of a "Senior or Mature Discount". Allstate offers a 10% discount for their basic liability and physical damage coverage. Some insurers will also reward drivers past the age of 55 if they receive certification from taking a Mature Driver Improvement course online. This course covers similar grounds as a defensive driving course does, and brushes up on your knowledge of the latest defensive driving tips. You can see a sample mature driver improvement lesson on the National Driver Safety Services’ website here.

Military and Federal Employee (8% to 15%)

If you have served the United States through military or federal government employment, you can find companies that honor that contribution. GEICO, for example, gives 8% to 15% discounts to active service members, federal employees, as well as veterans and retirees for their entire policy premium. Other companies such as USAA exclusively provide auto insurance products to military and defense personnel, and extend that benefit to family members up to two generations, including step-relatives, etc. For more info, go here.

Policy Car Insurance Discounts

The next level of car insurance discounts are based on your policy. You can alter your policy in certain ways so you can get certain discounts. These discounts are a mix between having to request the discount and having it automatically applied.

Discount Name

Companies That Offer Discount

Homeowner

State Farm, GEICO, Allstate, Travelers, Nationwide, Progressive, Farmers

Bundling/ Multi-Policy

State Farm, GEICO, Allstate, Travelers, Nationwide,Progressive, Farmers

Early Signing

State Farm, GEICO, Allstate, Travelers, Nationwide, Progressive, Liberty Mutual

Paid in Full

State Farm, Allstate, Travelers, Nationwide, Progressive

E-Bill

GEICO, Allstate, Progressive, Farmers, Liberty Mutual, Nationwide, Travelers

Loyalty

State Farm, Progressive, USAA, Farmers, Nationwide

Homeowner Car Insurance Discount (varies, 3%)

Some insurers will give a homeownership discount even if the policyholder has not purchased homeowners insurance with them. When available, the discount is applied to the liability, physical damage, personal injury protection, and UM/UIM coverage premium - a majority of the different types except rental and towing coverage. We found that Progressive gives a 3% discount to qualifying homeowners. Some insurers will honor both bundling and being a homeowner, and they are usually automatically applied when you acquire your quote online. We discuss bundling discounts below.

Multi-Car Discounts (varies, up to 25% on combined)

We have seen insurers, such as State Farm, giving as much as a 25% discount for a multi-car policy. For a 34 year-old couple insuring their Toyota Camry and Nissan Versa, putting both cars under the same policy could save them almost $200 on their car insurance costs a year versus having two separate insurers. Most insurers will ask that all vehicles on the same policy be owned by persons related by blood or marriage, but in some cases, insurers will also accepted unrelated roommates for multi-car discount consideration (given that they might jointly own or drive the vehicles).

Bundling / Multi-Policy Discount (5% - 25%)

Consumers with multiple assets to protect, such as auto and home, can potentially save on their overall insurance costs by placing them with the same company. The bundle can come in many combinations, such as auto + home, auto + boat, and auto + home + umbrella policy, to name a few, and each results in a different amount of premium reduction. While the discount is not necessarily equally applied across different insurance lines, insurers give a range of 5% to 25% discount on the total auto insurance premium for a bundling policies. We go more in-depth about the discount here.

Savings for Signing Early (~3%)

When you shop for insurance before your current policy expires – look out for the early signing discount. This tends to be a rarer discount, since less than half of the major insurers we’ve looked into offer it. When it is available, you can get 3% to 10% taken off your total policy premium, depending on how much in advance you sign up for the policy. Travelers, for example, offers this discount for as early as three days ahead of your current policy’s expiration.

Paid-in-Full Reduction (5% - 10%)

Insurers will encourage you pay your entire 6-month or annual premium up front by giving you a discount of around 5% to 10%. This is a separate option on your quote page that you will have to choose, and it usually requires the full premium upon the policy’s first effective date in order for the discount to kick in.

E-bill / Auto-Payment (5% - 10%, or $30)

If you have opted for an e-bill, there is a chance you can qualify for some savings on your premiums. This type of discount isn't too common; generally the more national and larger insurance companies with online presences have this available, while smaller carriers don't have the infrastructure. For example, Nationwide and Allied both take off $30 for setting up auto-payments through electronic fund transfer – or EFT – and Allstate has two separate discounts under this category: 5% for EFT auto-payments, and 10% for keeping your bills paperless.

Loyalty Discount

Insurers fight to keep business by offering loyalty discounts to faithful customers. While some providers like GEICO refer to their Multi-Car and Bundling Discount as a form of loyalty discount, we have seen other insurers rewarding consumers who've stayed with the same carrier for a long time. This discount doesn’t necessarily come in the usual percentage premium reduction, but it could be more rewarding in the long run. For example, Progressive has a tiered Loyalty Rewards Program that honors a 5th year customer with one large accident forgiveness and distinguished customer service. What does accident forgiveness amount to? Loyal drivers could be saving approximately 20% in total from avoiding the accident surcharge applied to their liability coverage and collision coverage premiums. Loyalty program specifics vary by insurers and state.

One note of caution for loyal customers: it might still be worth your while to shop around for rates if pricing is important to you and your insurer has regularly increased rates. Some studies, such as this one from the Office of Public Insurance Counsel in Texas, indicate that on average long-term policyholders could save over 19% on their annual auto premiums by switching.

Vehicle Car Insurance Discounts

If your car comes with certain attributes such as an anti-theft device, VIN stitching or anti-lock brakes, you likely will qualify for a few discounts. These additions to your vehicle provide a level of comfort to your insurance company that they are likely to not have to pay for damages that are prevented by these additions.

Discount Name

Companies That Offer Discount

Anti-Theft

State Farm, GEICO, Allstate, Travelers, Nationwide, Progressive, Farmers

Anti-Lock Brakes

State Farm, GEICO, Allstate, Travelers, Nationwide,Progressive, Farmers

Passive Restraint

State Farm, GEICO, Allstate, Travelers, Nationwide, Progressive, Liberty Mutual

New Car

State Farm, Allstate, Travelers, Nationwide, Progressive

Daytime Running Lights

GEICO, Allstate, Progressive, Farmers, Liberty Mutual, Nationwide, Travelers

Anti-Theft Car Insurance Discount (5% to 15%)

Having these devices and features may help provide drivers with a peace of mind, deter actual theft, or recover stolen vehicles, but they actually do little when it comes to saving on your car insurance premiums. Motorists can save 5% to 15% on their comprehensive coverage (up to 25% when insurers allow stacking), but comprehensive premiums tend to be the cheapest piece of your total coverage. Since these devices begin usually at $20, and can cost up to $200 or more, their costs usually outweigh their benefits. We don't recommend drivers get these features for the sake of savings on their premiums. Consumers should consider them more as investments from the perspective that these anti-theft devices can go a long way in preventing further property loss and their resulting premium increase. If your car is often the target of auto thefts, investing in one of these anti-theft devices may make sense.

An example of an anti-theft discount is a State Farm customer who gets both a hood-lock and a passive disabling system totaling $180. The company gives drivers a 10% discount on their comprehensive coverage premiums - which, based on the average comprehensive coverage premium of $134 a year, works out to savings of $13.40.

Anti-lock Brakes (ABS) (5% - 10%)

Most insurers we have seen require ABS to be factory-installed in order for a vehicle to qualify for this discount. As a result, this discount is usually automatically applied when you obtain a quote online. Nevertheless, if you do not see this discount on your policy, always ask your agent to verify. This discount could mean 5% to 10% off your collision coverage premium, and depending on your car type and deductible chosen, that could translate into $20 to $100 savings a year.

Passive Restraint (25% - 30%)

Passive restraint equipment includes front airbags and seatbelts. Since 1983, all new cars have passive restraint systems installed by default, and insurers are giving out generous discounts for at least driver seat and front passenger seat airbag and seatbelts. When the vehicle meets these requirements, passive restraint discounts of 25% to 30% are applied to the policy’s Personal Injury Protection or Medical Payment coverage premium.

New Car (10%)

For drivers insuring a car they just purchased, a New Car discount could be available to reduce the cost of your physical damage coverage premium. This really differs by insurer and state, along with how "new" is defined. For example, Allstate offers New Car discounts if the driver is the car’s first title owner, the car is less than three years old, and a 2012 or later model. Once drivers and their vehicles qualify, however, the 10% discount will remain on the insured’s policy for three years without additional renewal action.

Daytime Running Lights (~3%)

Just like your nighttime headlight, daytime running lights are believed to reduce collision accidents. While manufacturers don’t always equip cars with daytime running lights, having them could get drivers a 3% discount on almost the entire car insurance premium (except for comprehensive coverage). Although there are still debates about the effectiveness of daytime running lights, several large insurers offer this discount, including but not limited to: GEICO, Allstate, and State Farm.

Usage-Based Discount Programs

A number of insurers have taken a step further to reward safe driving by creating gadgets which monitor a customer's driving habits. Driver's can inserting a widget that measures metrics from your speed, mileage, time of day driven, to braking activity. A few examples of this are:

  • Progressive Snapshot®
  • Allstate Drivewise®
  • Travelers IntelliDrive®

Upon policy enrollment, drivers receive a gadget that connects to their car’s on-board diagnostics (OBD) port (standard for cars manufactured after 1996), which allows the insurer to record their drivers' data. Based on the data collected over six consecutive months, your car insurance company will either determine if you're eligible for a usage-based discount or rewards program. With Progressive, Snapshot® discounts range between 0% and 30% on your total premiums - with the average being 6% according to the company's reports.

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