Car Insurance Discounts That May Help Reduce Premiums
There are many factors that insurance companies take into consideration when determining your car insurance rate. Your age, gender, type of vehicle you drive, where you live, education level, and driving record are a few of the factors and from these, there are discounts you can capitalize from. Below you will find a list of the more common insurance discounts and a couple that are not so common. Some of the main categories of car insurance discounts available are customer loyalty, demographic, driver affiliations, driving history, and payment. It is important to remember that not all of these will be offered in every state or by every insurance company, so it is important to do your research by reading our guide below.
- Good Student discount: students who earn good grades can receive a good student discount on car insurance from their insurance company (if they offer it). Insurance companies have determined that good students are usually also good drivers. Typical requirements for receiving the discount are:
- Licensed driver age 16 to 25
- Must have a 3.0 or higher GPA
- A student attending high school full time or college student with 12 credit hours or more
- Verification of grades required
- Senior Citizen Discount: According to the NAIC’s (National Association of Insurance Commissioners) InsureU webpage, drivers between the ages of 55 and 70 may already be getting some of the lowest rates possible. If you are part of an affinity group like AAA or AARP, you can have access to discounts of about 5-10% off your insurance premium depending on the state you live in and your insurance company.
- Low Income Discount: A household’s income is not directly taken into consideration when insurance companies are determining premiums for drivers. Because of this, insurance companies usually don’t offer special programs for low-income families but there are a couple of state operated programs. California, Hawaii and New Jersey are the only states that have programs that offer low income car insurance. The requirements by state are listed below:
- California: must be at least 19, have a valid California license and own a car worth $25,000 or less. You must also meet certain income requirements.
- Hawaii: You must be part of the Aid to Aged, Blind and Disabled program.
- New Jersey: Must have a valid New Jersey driver’s license and be enrolled in federal Medicaid with hospitalization benefits.
Customer Loyalty Discounts
- Home and Auto Bundling: If your car insurance company provides home-owners or renters insurance, you can potentially save money by purchasing both policies from the same provider which is called bundling. A bundling discount is also known as a multi-policy discount or a companion discount. The amount of the discount will depend on the insurance company but the average nationwide savings is about 20%.
- Multi-Car Discount: A multi-car discount is a discount on the premiums of the vehicles under one policy. This discount does not increase as more vehicles are added but instead has a percentage taken off the premium of each vehicle. Each insurance company that offers this discount might have different eligibility requirements regarding ownership of vehicle, residence, or being on the same or different policies. Because each company might be a little different, it is very important to do comparison shopping to ensure you are saving the most money.
- Customer Loyalty: The customer loyalty discount is available from some insurance companies who reward customers that have been with them for a long time and are good drivers. This discount is both a positive and negative to customers. On the positive side, it saves customers who are good drivers and have been with the same company by either providing a percentage discount on their policy or offering better coverage for the same price as their current coverage. On the negative side, customers who remain with the same company over a period might become victims of price optimization which could end up raising the cost of insurance to loyal customers. Therefore, it is important to always research and compare car insurance quotes and companies to ensure you are truly paying the right price.
Driver Affiliation Discounts
These discounts are available to drivers who might be part of an affinity group like businesses, clubs, fraternities and sororities, or other groups with a common purpose like AAA or AARP. If you are simply a member, you can already get about a 10% discount without having to be part of a group plan policy. To learn more about the specifics of affinity groups, read our article here!
Driving History Discounts
- Low Mileage Discount: This discount can also be called the usage-based discount. If your insurance company offers this discount, you may be eligible if you drive below a certain number of miles per year. To insurance companies, if you don’t drive much, you are of lower risk to them as you are on the road less which means you would cost less to them.
- Accident Free Discount: This discount is for those who have been accident free for at least 5 years and have not been charged with any at fault moving violations. The discount is usually around 10% but will vary based on where you live and who your insurer is.
- Good Driver Discount: This discount is like the accident free discount and can in some cases be the same one. If you have a good driving record and have had no at fault accidents or moving violations within the last 5 years you are most likely eligible for this 10% discount if your insurance company provides it. Keep in mind, the 5 years and the amount of the discount is an average and it will vary depending on where you live and the requirements of your insurance company.
This discount is provided by some companies who reward customers who renew early, pay in full up front, or enroll in autopay. In a time where everything is online, you have probably heard of these discounts before and are aware of how they work. These discounts have nothing to do with your driving record but instead, incentivize you to pay early or all at once to get a small discount.
Like the payment discounts, the paperless discount is easy to take advantage of if your company offers it. The discount has nothing to do with your driving record or any of the insurance rating factors but instead rewards you for receiving your statements and bills electronically. To take in the rewards from this discount, you must have a valid email address and accept the insurance company’s terms and conditions for enrolling in paperless bills and statements.
We can help you save!
Once you have reviewed these discounts and determined if you are taking advantage of them, if you still feel like you are overpaying for insurance, consider searching for a new provider by comparing free car insurance quotes online from Compare.com.