The Complete Guide to Car Insurance Discounts in 2023

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.

Key Takeaways:

• Car insurance has become more expensive, and rates are expected to continue to increase in the coming months.
• Car insurance discounts may be available based on your driver profile, driving history, vehicle, occupation, and policy.
• You can stack multiple discounts to maximize your 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.

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:

• Good student: Good student discounts are available to teens and college students who maintain a high GPA. For example, young drivers can save up to 25% on their State Farm insurance by maintaining good grades in high school.
• Homeowner: Some insurance companies will give you a discount for being a homeowner, even if you didn’t take out a homeowners insurance policy with them. For example, Progressive gives homeowners a discount of up to 10% on car insurance.
• Student away-at-school: If you have a student attending school far from home who doesn’t have a vehicle, you may be eligible for a discount on your auto insurance. Travelers offers this discount to parents with a full-time student attending and residing at a school more than 100 miles away.
• Customer loyalty: If you’ve been with your current insurance company for a long time, you may be eligible for a loyalty discount. Most insurance companies offer some sort of loyalty discount. Progressive, for example, offers multi-car and multi-policy discounts and rewards drivers who maintain continuous insurance coverage.

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 are less of a liability risk to insurance companies, so most will reward you for demonstrating good driving behavior. Anyone enrolled in Allstate’s Safe Driving Bonus program earns a bonus every six months they remain accident-free.
• Defensive driving course: Taking a defensive driving course is a good way for seniors to earn a discount on car insurance. For example, AARP offers a multi-year discount on car insurance to seniors who take the AARP Smart Driver course.
• Low-mileage: Many insurance companies are willing to provide a reduced rate to drivers who don’t spend much time on the road. For example, Hugo is a newer insurance company offering a flex policy where you only pay for the days you drive. This gives low-mileage drivers a way to save, and you can make changes to your plan right from your phone.
• Telematics-based safe-driving app: A telematics-based safe-driving app monitors your mileage, driving habits, and the time of day when you’re driving. If you exhibit good driving behaviors, you can earn a discount on your car insurance. GEICO’s DriveEasy program is a good example of this. As you use the app, you’ll earn a driving score. GEICO then factors your driving score into your insurance rate.

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: Drivers with hybrid cars, electric vehicles, or other alternative fuel vehicles could qualify for a discount on car insurance. For example, Farmers Insurance offers a 5% alternative fuel discount.
• Anti-theft devices: National insurance companies like GEICO, Allstate, and State Farm offer discounts for using anti-theft devices in your vehicle. Check with your insurance company to see what safety features qualify for this discount.
• New car: If your vehicle is fewer than three years old, you may qualify for a new-car discount on your auto insurance. Allstate offers this discount if your vehicle is a current model year or one year prior and you’re the first owner.
• Safety equipment: You may also receive a discount if your car is equipped with certain safety features, like airbags and anti-lock brakes. For example, you could save up to 23% on car insurance with GEICO if you have airbags in your vehicle.

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 and former military members can earn a discount on car insurance. GEICO is one of the best options, saving you up to 15% on auto insurance.
• Teacher: Some companies offer special discounts on auto insurance to teachers. For example, Liberty Mutual won’t charge teachers a deductible if they’re involved in an accident, or their car is broken into during a school-related event.
• Federal employee: Active and retired federal employees may save money on auto insurance as well. GEICO offers discounts based on your job grade or membership in a federal organization.

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: Most insurance companies will give you a discount for buying more than one insurance policy with them. For instance, you could earn a discount by bundling your homeowners insurance and car insurance together or with a multi-car discount.
• Automatic payment: You may also earn a discount if you set up automatic payments with your insurance company. Direct Auto offers a discount of up to 5% just for setting up auto pay.
• Early shopper: If you want to switch insurance companies, you may qualify for an early shopper discount. That means you change insurance companies before your current policy expires.
• Pay-in-full: Paying your premium up front and in full can also earn you a discount on your car insurance.
• Paperless: You may also receive a discount if you sign up for paperless billing.
• Multi-vehicle: If you have more than one car to insure, you can earn a multi-vehicle discount on your auto insurance.

Car Insurance Discounts by Company

Most insurance companies offer discounts to their customers — but different companies specialize in different areas, so it’s important to know which one best fits your unique needs.

Below is an overview of the discounts offered by seven leading insurers.

GEICO

GEICO is known for offering excellent discounts on auto insurance. You could receive a discount if your vehicle has daytime running lights, airbags, and an anti-theft system. GEICO also rewards customers who exhibit good driving behavior, like wearing a seat belt or taking a defensive driving course.

GEICO also offers discounts to military members, federal employees, and members of partner organizations. The company partners with hundreds of groups to provide additional discounts on auto insurance.

Progressive

Progressive drivers save an average of $650 on auto insurance, according to its website. The company says 99% of its customers earn at least one discount on their auto insurance.

For example, you can earn a discount of up to 7% if you receive an online quote. And you could earn an additional discount of up to 9% for setting up your policy online. If you take advantage of Progressive’s Snapshot program, you can earn a discount for good driving behavior.

Travelers

Travelers offers discounts for things like homeownership, continuous coverage, and owning a new car. And if you own or lease a hybrid vehicle, you could earn a discount for using an environmentally friendly car.

The company also offers a discount to members of participating businesses, associations, and credit unions. This is a good way to access discounts you won’t find anywhere else.

Liberty Mutual

Liberty Mutual offers discounts for signing up online, maintaining a good driving history, and signing up for paperless billing. And you can instantly earn a 10% discount by signing up for the company’s RightTrack program.

After signing up, you’ll download the Liberty Mutual mobile app and track your driving history over 90 days. The app tracks your driving habits, assigns you a driving score, and rewards you for good driving behavior. You could save up to 30% on your policy by completing the program.

Allstate

Allstate offers discounts for things like being a good student, having anti-lock brakes on your car, setting up automatic payments, and paying your policy in full. And low-mileage drivers may want to sign up for Milewise, Allstate’s pay-per-mile car insurance.

With Milewise, you’ll pay a daily rate base plus a per-mile rate every time you drive. It’s a great option for anyone who works from home, is retired, or drives infrequently.

Nationwide

Nationwide offers a variety of discounts for drivers. You could earn a discount for maintaining an accident-free driving record, maintaining a B average or better in school, or setting up automatic payments.

Nationwide also offers a usage-based insurance program called SmartRide that rewards safe driving. You’ll receive a 10% discount for signing up and receive feedback to help you make better driving decisions. You could earn up to 40% off in discounts, depending on how safely you drive.

Farmers

Farmers offers auto insurance discounts to good students, safe drivers, members of certain occupational groups, and more. The company also rewards customers who haven’t had any late fees assessed over the past year with a discount when they renew their policy.

You can also earn a discount for having certain safety features on your car, and California drivers can receive a discount for having a hybrid or electric vehicle. Many of the company’s discounts are state-specific, so you’ll need to contact a Farmers agent to see what you qualify for.

How to Get Cheap Car Insurance

Here are five strategies you can use to lower your car insurance premiums.

Maintain a good driving record

Maintaining a clean driving record is the best way to find cheap car insurance. The more tickets and moving traffic violations you have on file, the more you can expect to pay for auto insurance.

Ask about discounts

Most people can lower their insurance premiums with discounts, regardless of their driving history. When you’re researching different insurance companies, look for one with discounts that benefit you. For example, homeowners can save by bundling their insurance policies, and teens can save money by maintaining a good GPA.

Maintain good credit

Research has shown that drivers with good credit file fewer insurance claims, according to the Insurance Information Institute. So maintaining good credit is another way to lower your insurance costs. Make sure to pay your bills on time and keep your credit utilization rate low.

Raise your deductible

Your deductible is an out-of-pocket expense you’ll pay before your insurance coverage kicks in. Requesting a higher deductible can lower your insurance costs, since it’s less risky for your insurer.

Shop around

Finally, it’s important to compare car insurance quotes before choosing a policy. Make sure to receive quotes from at least three different companies (car insurance comparison sites can help). This will help you find auto insurance that’s best for you.

Car Insurance Discount FAQs

The following frequently asked questions contain more information about finding car insurance discounts.

Which insurance company has the most discounts?

GEICO, Progressive, and Allstate are all known for offering generous discounts to drivers. However, discounts can vary depending on the insurance company and the state you live in, so it’s a good idea to shop around among several different companies.

What are the different types of car insurance discounts available?

Most insurance companies offer various discounts based on your driving type, driving history, vehicle, occupation, and policy. For example, you can find discounts for maintaining a good driving record, having certain safety features in your car, or maintaining a high GPA.

How can I qualify for car insurance discounts?

Contact your insurance company and see what discounts you qualify for. An insurance agent or customer service representative should be able to walk you through this process.

If I have a good driving record, can I get any special discounts?

Yes. Most insurance companies offer a discount for maintaining a good driving record. For example, Allstate gives drivers a bonus for every six months they remain accident-free.

Sources

1. U.S. Bureau of Labor Statistics “Bureau of Labor Statistics Data,” Accessed Aug. 3, 2023.
2. Insurance Information Institute “How to save money on car insurance,” Accessed Aug. 3, 2023.
3. Insurance Information Institute “What determines the price of an auto insurance policy?” Accessed Aug. 3, 2023.
4. AARP “AARP Driver Safety: Online and Classroom Courses,” Accessed Aug. 3, 2023.
5. Insurance Information Institute “Nine ways to lower your auto insurance costs,” Accessed Aug. 3, 2023.