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Auto insurance discounts to ask for: complete guide
This auto insurance resource covers auto insurance discounts -- from ordinary to obscure.
You don't have to wait until your auto insurance policy is up for renewal to ask about discounts. In fact, you can ask your insurer about what discounts are available at any time.
You can also compare auto insurance quotes now and determine the most affordable car insurance. If a different car insurance company offers you better base rates and discounts, you can move your policy to another auto insurance carrier right away.
Auto insurance discounts versus tiers Discount auto insurance rating factors Common car insurance discounts available How discount auto insurance works Saving with discounted auto insurance Getting the right discounted auto insurance Improving your car insurance rate
Auto insurance discounts vs. tiers
John David, a top-selling insurance veteran, and the author of 10 Questions -- The Insider's Guide to Saving Money on Auto Insurance, says that two factors affect your insurance rate:
The tier to which you're assigned
Discounts for which you qualify
Getting assigned to the highest tier possible can be even more important than sniffing out discounts. "States control discounts strictly," he explains, "But 'tiering,' not so much."
Discount auto insurance rating factors
The traditional rating factors that determine your car insurance tier and base rate are:
Age
Gender
Marital status
Years of driving experience
ZIP code
Driving record
Claims history
Credit rating (in states that allow it)
Vehicle type
Vehicle usage
Insurance that you've had or currently have is also important. The number of previous years insured and any gaps in coverage are considered as well as what coverage types, limits and deductibles you want on a policy.
Insurers analyze these factors and determine how much of a risk you pose. Each policy has a base rate for your coverage, and then formulas are applied to come up with a rate that reflects your risk. Every auto insurance company uses its own formula to calculate your premium. That means companies vary on how they weight each risk factor - which is good for customers because you can shop around and find the insurance company that best fits you and your risk factors.
When you look for the cheapest auto insurance, you must be completely honest while making yourself as attractive to insurers as possible. Insurers must charge the least amount they can to be competitive, but enough to offset the risk that a driver represents.
Common car insurance discounts available
The following 25 auto insurance discounts may be available to you; be sure to ask an agent about these opportunities to save. Note that car insurance discounts may vary by state, vehicle, driving record, credit history and other factors.
Discount | Description | Typical amount |
1. Accident-free | Drivers with no "chargeable" accidents (accidents that cost the insurer money) during the past three years may save on their car insurance premium. "Accident-free" is slightly different from "good or safe driver" discounts. Accidents which were not your fault but resulted in losses can make you ineligible for the accident-free benefit, but still qualified for a good or safe driver rate. | 5% |
2. Affiliation or "affinity" | You can qualify for a discount through your employer, school, team, club or membership in another group. Hundreds of groups have some relationship with one or more insurers. | 25% |
3. Anti-lock brakes | Anti-lock brakes not only keep you safer, but they can lower your insurance bill as well. | 10% |
4. Anti-theft | Installing devices such as alarms, tracking systems, and kill-switches can reduce your auto insurance rate. Some insurers allow after-market devices; others require items to be factory-installed. Having a Lo-Jack reduces your premium more than an audible alarm. The better the device, the higher the discount. | 5 -- 20% |
5. Auto-pay | Catch a break for setting up automatic payments from your bank. | $45 -- $50 per year |
6. Bundled | Discounted rates often apply when drivers have unrelated policies (for example, bundled home and auto, life, or health) with the same insurance company. | 5 -- 10% |
7. Defensive driving course | In most states, this applies to mature drivers, over age 55, who complete an approved defensive driving course. Some states have different ages, while others offer the discount to any driver who completes the training. Note that the course must be taken voluntarily, not because of a court order. | 10% |
8. Driver training | This discount usually applies to drivers under age 21 who complete an approved course. Training must usually include behind-the-wheel instruction in addition to classroom work. | 8 -- 10% |
9. Early signing/renewal | Some insurers offer this discount to those who renew their policy early. If you're switching companies, some offer an early signing bonus if you old policy is not yet up for renewal. | 10% |
10. Emergency road assistance | Purchase emergency road assistance from a provider, such as AAA, and some car insurance companies discount your auto insurance. | 5% |
11. Good or safe driver | Usually, all drivers in the household must have no at-fault accidents or moving violations during the past three to five years. Some states, such as California, have unique definitions of "good driving." For example, in California, a licensed driver who has not been at fault in an accident, received more than one point on his or her driving record, or gone to traffic school for more than one traffic violation, during the past three years, is considered a "good driver." | 20% |
12. Good student | Commonly, this means drivers under 25 who are full-time students in high school or college and either in the top 20 percent of their class, on the Dean's List or carrying at least a 3.0 (B) grade point average. | 15 -- 25% |
13. Green or hybrid cars | Some companies reduce your auto insurance cost if you own or lease a hybrid or electric vehicle. | 10% |
14. Homeowner | An auto insurance discount may apply when an insured owns a single family home or condominium. | 5 -- 15% |
15. Low income | This is a state-mandated requirement for drivers who meet income thresholds and other conditions | Varies by state, vehicle and driving record |
16. Loyalty | A loyalty car insurance discount is sometimes available to those with policies in-force for more than one consecutive year. Discounts may increase with each successive year. | 15 -- 25% |
17. Military | A military car insurance discount usually applies to active military personnel and their households. | 15% for cars garaged on a military base 90% for deployed service members |
18. Multi-car | This discount is often available when you insure more than one car on a single auto insurance policy. | 10 -- 25% |
19. New car | Owners of newer cars can reduce their rates with this discount, usually good for first three years. | 10% |
20. Paid-in-full | Those who pay their car insurance premium in its entirety, at the beginning of their contract term may receive a discount. | 5 -- 10% |
21. Paperless | Elect to view and pay your bill online and some auto insurance carriers may offer a discount. | 3% |
22. Safety; passive restraint and airbag | In most cases, this applies to older vehicles (1990s or earlier) with factory-installed airbags. Some insurers offer discounts for newer cars with airbags and other safety features. | 5% |
23. Senior | Senior auto insurance discounts usually apply to drivers over age 65. | 15 -- 35% |
24. Students away from home | Students who do not have regular access to a vehicle, and live more than 100 miles away from home, may be eligible for auto insurance discounts. | 7 -- 30% |
25. Usage or low-mileage | Those who drive below their insurer's annual mileage cap (often between 7,500 and 15,000 miles per year) may qualify for a usage-based discount. | 2% |
How discount auto insurance works
Where do discounts come in? Insurers observe that drivers with certain characteristics tend to have fewer accidents and file fewer claims. Insurers reward customers possessing those characteristics. Suppose you work from home and drive very little, and your insurer has determined that those who work from home have accidents at half the rate of other drivers. In that case, your expected cost to the insurer drops, so it can charge you less for coverage. That's the reasoning behind auto insurance discounts.
In addition, states may require insurers to offer certain discounts to encourage good driver behavior -- such as taking defensive driving courses.
Risk factors are carefully reviewed when determining auto insurance premiums.
a) Your insurer determines your base rate based on your risk factors.
b) Factors that could result in surcharges are considered, such as: a ticket on your driving record.
c) Your insurer looks for information that may reduce your potential risk and matches you with an appropriate discount.
d) Your final premium is calculated this way:
Base rate + surcharges - discounts = premium
Saving with discounted auto insurance
According to Consumer Reports, discounts don't always offer eye-popping savings. Advertised discounts (for example, 5 percent off for having airbags) don't necessarily apply to your entire insurance bill. The airbag discount might only apply to your personal medical coverage, which is a relatively small part of your policy. Another unwelcome surprise is that when you claim one discount, the insurer may reduce or eliminate others.
Also, there is a limit on how much of a discount you can get altogether, for instance some insurers only allow up to a 25 percent discount overall.
Your savings may also depend on where you live. Consumer Reports analysts found that student driver training discounts varied by location.
Location examples | Driver training savings |
California | $334 |
Louisiana | $155 |
Massachusetts | $386 |
National Average | $63 |
The good student discount for families with student drivers under 25 also varied considerably.
Location examples | Good student savings |
California | $474 |
Louisiana | $688 |
Minnesota | $471 |
National Average | $260 |
Getting the right discounted auto insurance
Do your homework and shop online to compare auto insurance quotes and find the cheapest auto insurance that provides the coverage you need. Insurance.com makes the process simple and you may be able to compare personalized quotes within a few minutes.
