The Complete Guide to Car Insurance Discounts in 2025

Car insurance costs have increased by 25% in many areas since the start of 2022, according to the U.S. Bureau of Labor Statistics. Those numbers are expected to increase even more as auto insurance companies continue raising rates to offset historical losses.
So, if you’re looking for ways to decrease your car insurance costs, discounts are a good way to save. Car insurance companies offer drivers discounts for all sorts of things, from safe driving and staying accident-free to joining certain organizations or maintaining a good GPA in school. Understanding how these discounts work will help you maximize your auto insurance savings.

Types of Car Insurance Discounts

Car insurance discounts fall into five different categories: driver type, driving history, vehicle-related, occupation, and policy-related. However, these discounts will vary slightly depending on your insurance company and state, so it’s important to shop around for lower rates.

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Let’s take a look at the different discount types and how you can qualify for maximum savings.

Discounts based on driver type

Insurance companies offer discounts based on the type of driver you are, and there’s often nothing you need to do to earn these discounts. Here are some discounts you may be able to take advantage of based on your driver type, as well as some of the most notable companies offering them:

• Good student: Unmarried, full-time students between the ages of 16 and 23 or 25 (depending on the insurance company) can get a good student discount if they maintain a B or above average GPA in school. Homeschooled students must rank in the top 20% of national standardized test scores, such as the ACT, PLAN, PSAT, or SAT 1.

• Homeowner: You can qualify for the homeownership discount with select insurers if you own a condo, townhome, or a single- or multi-family home. You must provide proof of homeownership at the address that matches your vehicle garaging address, such as a mortgage payment coupon, a copy of your homeowners insurance declarations page, county or city tax documents, or a property assessment or appraisal.

• Student away at school: This discount is available for students under 25 who don’t take a car to school with them and only drive occasionally, like coming home during a school break. To qualify, the student must go to a school at least 100 miles from the vehicle's garaging address.

• Customer loyalty: Some insurance companies offer a loyalty discount if you remain insured with the same insurer for two or more consecutive years. Discounts can range from a continuous coverage discount and accident forgiveness programs to multi-policy and multi-car discounts.

Driving history discounts

Your driving record is one of the biggest factors influencing your insurance premiums. The better your driving history, the lower you can expect your car insurance to be.
Here are four ways you can earn discounts based on your driving history:

• Safe driver: Good drivers who practice safe driving habits can earn good driver discounts and rewards for avoiding tickets and accidents. Safe driving discount requirements can vary by insurance company — you may have to have a clean driving record for three to five years to be eligible.

• Defensive driver: Drivers who complete a state-approved defensive driving course online or in person can be eligible for a defensive driver discount. Although some insurance companies only offer this discount to seniors, others allow drivers of all ages to take advantage of the savings by completing a driver safety course.

• Low mileage: The low-mileage discount is for drivers who drive less than 13,500 per year (the national average), according to the Federal Highway Administration. Mileage requirements vary by insurance company — some may limit annual mileage to 7,500 or 10,000, for example, and you usually have to provide an annual odometer reading to remain eligible for the discount.

• Telematics-based safe-driving app: Some insurance companies offer usage-based telematics programs. In exchange for monitoring your mileage and driving habits like speed, hard braking, and fast accelerations, the insurer will reward you for safe driving habits. Although most insurers offer only discounts for participation, some may increase your insurance premiums if your driving habits prove you’re making more risky driving decisions than safe ones.

Vehicle-related discounts

The car you drive also plays a big role in determining how much you pay for car insurance. Certain vehicles have features that can make you safer on the road and decrease the likelihood of theft.
Here are four vehicle-related discounts your insurance company may offer:

• Alternative energy: A few auto insurance companies offer a discount to drivers with hybrid, electric, or alternative-fuel vehicles.

• Anti-theft devices: Many of the top auto insurers offer an anti-theft discount for disabling devices that deter theft, such as a steering wheel lock, a car alarm, VIN etching, or a vehicle tracking or recovery system installed in the car. The types of devices and discount savings vary by insurance company.

• New car: If your vehicle is under three years old, you may qualify for a new car discount. The discount varies by make, model, and insurance company.

• Safety equipment: Installing safety features in your vehicle can also make you eligible for a discount with many car insurance companies. For example, airbags, blind-spot detectors, locking seat belts, daytime running lights, and anti-lock brakes can make you eligible for a passive restraint discount. Newer cars with adaptive technology, like lane assist, automatic emergency braking, and electronic stability control, could also lower your auto insurance premium.

Membership/occupational discounts

Auto insurance companies also offer discounts based on your profession. You may be able to earn a discount if you work in one of the following careers:

• Military and veterans: Active-duty military members, reservists, and armed forces veterans are eligible for a military discount with some car insurance companies. Some insurers may also have additional discounts if you live on a military base or put your car in storage during deployment.

• Teacher: If you’re a teacher and can provide proof of employment with a school system, you can usually lower your auto policy costs with a teacher-specific discount. Some insurers even offer customized coverage options, like personal property coverage and vandalism loss protection.

• Federal employee: A federal employee discount is another example of an affinity discount many car insurance companies offer. The list can also include colleges, universities, and members of certain businesses, charities, professional organizations, occupation groups, credit unions, and retiree organizations. Young drivers can also take advantage of discounts if they’re members of a fraternity or sorority, as can adults who are alumni. Discount amounts, eligibility requirements, and insurance company participation vary.

Policy-related discounts

These discounts are available based on your specific policy type, making them easier for most people to take advantage of. It’s a good idea to ask your insurance agent about how to take advantage of policy-related discounts.

• Bundling: Insuring your car and home insurance with the same insurer is often the largest single discount available. You can also typically get a multi-policy discount if you insure your auto with other insurance policies, like boat, ATV, or life insurance.

• Automatic payment: If you make automatic credit card or EFT monthly payments instead of paying the bill yourself, you may get a lower rate. This is also a great way to set your payment and forget about it, so you don’t risk losing your insurance coverage.

• Early shopper: The advance quote discount is available if you shop for insurance seven or more days before your current policy expiration date.

• Pay-in-full: Another way to save money on your car insurance premium is to pay the policy in full.

• Paperless: If you opt for paperless documents instead of getting them mailed to you, most insurance companies will pass along the savings with paperless auto insurance discounts.

• Multi-vehicle: When you own more than one car, insuring them all with the same insurance company is a good idea because it’s easier to keep track of your policy dates and bill payments. Most insurance companies also extend a multi-car discount, which you can stack with other discounts to get even more savings.

Usage-based discount programs

Usage-based insurance (UBI) programs offer drivers a way to lower their car insurance rates based on driving behavior. You get an initial discount of 5% to 10% for participating and a final discount based on your driving score. The insurance company tracks driving habits through a smartphone app or plug-in vehicle device.
We highlight seven UBI programs in the table below and the pros and cons of each program.

• Progressive’s Snapshot can earn you up to 35% in savings, but around two in 10 drivers see their premiums increase due to poor driving behaviors. To maximize your savings potential, avoid driving late at night, braking hard, accelerating fast, and distracted driving.

• Liberty Mutual RightTrack: This program only requires 90 days to earn up to 30% savings on your car insurance coverage with the Liberty Mutual mobile app. But only Android phones with a gyroscope, accelerometer, and proximity sensors are eligible.

• Drive Safe & Save: You can use your smartphone or connected car account to participate in State Farm’s program. You can earn up to 30% in savings, but your discount can fluctuate after each policy period, depending on your driving habits in the previous term.

• DriveWise: Although Allstate advertises you can save up to 40% with its program, many participants say to expect to save around 20% to 25% realistically. And while it doesn’t track your location, many reviewers complain that it drains their smartphone battery quickly.

• Travelers IntelliDrive: Like with Snapshot, participating in this telematics app program could cause your rates to increase if your prior term’s driving habits were too risky. But it only takes 90 days to get your first discount, which could help you get better rates on your renewal.

• SmartRide: Nationwide’s safe driving program allows you to earn up to 40% in savings in as little as 80 days, to be applied at your next renewal. Your savings can only increase with each renewal if you stay with the program, and it won’t go down like with other companies. But it might not be the best choice if you drive a lot or late at night.

• TrueLane: The Hartford’s app tracks driving habits, similar to other programs, plus your location. Although you can save 12% for signing up, the maximum final discount is 25%, the lowest of the insurance company usage-based programs.

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Car Insurance Discount FAQs

Sources

1. U.S. Bureau of Labor Statistics, “Bureau of Labor Statistics Data,” Accessed August 3, 2023.

2. Insurance Information Institute, “How to save money on car insurance,” Accessed August 3, 2023.

3. Insurance Information Institute, “What determines the price of an auto insurance policy?,” Accessed August 3, 2023.

4. AARP, “AARP Driver Safety: Online and Classroom Courses,” Accessed August 3, 2023.

5. Insurance Information Institute, “Nine ways to lower your auto insurance costs,” Accessed August 3, 2023.

6. Federal Highway Administration, “Average Annual Miles per Driver by Age Group,” Accessed January 24, 2024.