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Car Insurance Discounts

CAR INSURANCE DISCOUNTS - Auto insurance discounts fall into five categories: driver safety, driver status, policy, vehicle and usage-based. We explain which ones are automatically applied when you get a quote and which ones require driver initiative, and we show you how to obtain these discounts and save money on your car insurance.

Driver safety car insurance discounts

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

Discount name Companies that offer the 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% to 15% discount on their liability, collision and personal injury or medical payments coverages. Classes teach drivers how to better assess road, traffic and weather conditions to avoid accidents.

One way 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 you must be a senior citizen to be eligible for these reductions.

The table below shows how much classes can cost at two national schools, and the size of the discount (using Geico as an example). Savings are calculated based on average insurance expenditure per the National Association of Insurance Commissioners (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 $48.82

Defensive driving discount (10% to 15%)

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 signup, you can adjust your premium at the time of your next renewal if you have been accident-free for the required time. The definition of a "good driver" may change slightly across companies, so check with your agent for the details.

Safe driver discount (10%)

Safe driver discounts are given to motorists for conservative habits such as having all passengers wear seat belts, 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, which distinguish between the two and offer them as separate discounts. Companies like Progressive and Allstate 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 drives 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 may have to sign up for driver monitoring technology, which we discuss more below.

Driver status 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 name Companies 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% to 25%)

For young drivers, rates are very high until you turn 25. If you maintain a B average, however, you can qualify for savings as high as 25% in the form of a good-student discount. You just need to be a full-time student and provide proof of your scholastic records to your insurance company.

Away-from-home student discount (5% to 25%)

As a parent, you can save on your policy if your child driver left their car at home when they went to college and the college is located more than 100 miles away from home. You may ask your agent about this discount right away or during your next renewal. This discount should show a significant reduction in your liability coverage, as we have seen as much as 25% savings on premiums.

Professional and academic organizations, employee discounts (2% to 10%)

Most insurance companies have affiliations and partnerships with other organizations that provide their members or employees with additional discounts. These tend to be trade or professional organizations and university alumni groups. Geico currently partners with more than 500 professional and university organizations whose members may earn membership discounts upon buying a policy. For these members, Geico offers a 3% discount on the total policy premium.

Senior/mature driver (5% to 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 ground as a defensive driving course and helps you brush up on your knowledge of the latest defensive driving tips.

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 and 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 up to two generations of family members.

Policy car insurance discounts

Policy car insurance discounts are based on your policy. You can alter your policy in certain ways so that you get specific discounts. Sometimes the discounts are automatically applied, and sometimes you have to request them.

Discount name Companies that offer the 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
Electronic billing Geico, Allstate, Progressive, Farmers, Liberty Mutual, Nationwide, Travelers
Loyalty State Farm, Progressive, USAA, Farmers, Nationwide

Homeowner car insurance discount (varies, 3%)

Some insurers provide 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 uninsured/underinsured motorist premiums — a majority of the different types of coverage, 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 the discounts are usually automatically applied when you acquire your quote online. We discuss bundling discounts below.

Multi-car discount (varies, up to 25%)

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 per year on their car insurance costs. 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 accept unrelated roommates for multi-car discount consideration (given that they might jointly own or drive the vehicles).

Bundling/multi-policy discount (5% to 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 plus home, auto plus boat, and auto plus home plus umbrella policy, to name a few, and each results in a different premium reduction. While the discounts are not necessarily equally applied across different insurance lines, insurers give a range of 5% to 25% off the total auto insurance premium for bundling policies.

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 — 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 far in advance you sign up for the policy. Travelers, for example, offers this discount if you sign up three days ahead of your current policy's expiration.

Paid-in-full reduction (5% to 10%)

Insurers encourage you to pay your entire six-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.

Electronic billing/autopay (5% to 10%, or $30)

If you have opted for electronic billing, there is a chance you can qualify for some savings on your premiums. This type of discount isn't very common; generally, national and larger insurance companies with online presences have this available, while smaller carriers don't have the infrastructure.

Nationwide and Allied take $30 off for setting up automatic payments through electronic fund transfer (EFT). Allstate has two separate discounts under this category: 5% for automatic EFT payments and 10% for keeping your bills paperless.

Loyalty discount

Insurers fight to keep their business by offering loyalty discounts to faithful customers. While some providers like Geico refer to their multi-car and bundling discounts as loyalty discounts, 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 form as a premium reduction, but it could be more rewarding in the long run.

For example, Progressive has a tiered loyalty rewards program that honors fifth-year customers with one large accident forgiveness and distinguished customer service.

What does accident forgiveness amount to? Loyal drivers could be saving approximately 20% in total by avoiding the accident surcharge applied to their liability and collision coverage premiums. Loyalty program specifics vary by insurer 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 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 will probably qualify for a few discounts. These additions to your vehicle provide a level of comfort to your insurance company because they can prevent costly damage.

Discount name Companies that offer the 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 peace of mind, deter actual theft or help 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 at about $20, and can cost up to $200 or more, their costs usually outweigh their benefits.

We don't recommend purchasing anti-theft devices for the sake of saving on your premiums.

Consumers should consider them an investment that can go a long way in preventing further property loss and the resulting premium increase. If your car is often the target of auto thefts, investing in one of these anti-theft devices may make sense.

Here's an example of an anti-theft discount in action: A State Farm customer gets both a hood-lock and a passive disabling system totaling $180. The company gives drivers a 10% discount on their comprehensive coverage premiums. Based on the average comprehensive coverage premium of $134 a year, this works out to a savings of only $13.40.

Anti-lock brakes (5% to 10%)

Most insurers require an anti-lock braking system (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. Nevertheless, if you do not see this discount on your policy, always ask your agent to verify. The discount could mean 5% to 10% off your collision coverage premium, and depending on your car type and deductible, that could translate to savings of $20 to $100 a year

Passive restraint (25% to 30%)

Passive restraint equipment includes front airbags and seat belts. Since 1983, all new cars have passive restraint systems installed by default, and insurers give out generous discounts for at least driver's seat and front passenger seat airbags and seat belts. When the vehicle meets the requirements, passive restraint discounts of 25% to 30% are applied to the policy's personal injury protection or medical payments 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 and the vehicle is a current model year or one year prior. 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 headlights, 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 gone a step further to reward safe driving by creating gadgets that monitor a customer's driving habits. Drivers can insert a widget that measures metrics like speed, mileage, time of day driven and braking activity. Here are a few examples:

  • 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 determine if you're eligible for a usage-based discount or rewards program. With Progressive, Snapshot discounts range from 0% to 30% on your total premium — with the average being 6% according to the company's reports.

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