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:

  1. The tier to which you're assigned

  2. 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.



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.


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.


3. Anti-lock brakes

Anti-lock brakes not only keep you safer, but they can lower your insurance bill as well.


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.


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. Emergency road assistance

Purchase emergency road assistance from a provider, such as AAA, and some car insurance companies discount your auto insurance.


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."


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.


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.


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.


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.


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.


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







National Average


The good student discount for families with student drivers under 25 also varied considerably.

Location examples

Good student savings







National Average


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. makes the process simple and you may be able to compare personalized quotes within a few minutes.

Review this list of auto insurance discounts and note those that might pertain to you. Be sure to give that information to every insurance provider you contact and ask about available car insurance discounts. Choose a carrier that wants your business and is willing to earn it.

Improving your car insurance rate

Before researching which company offers the best car insurance discounts, devote some effort into raising your tier. Insurers may have hundreds of tiers, and your particular set of strengths and weaknesses will affect your rate differently at each company.

Here are five factors that can have a significant impact on your tier:

1. Mileage

"Most drivers overestimate the number of miles they drive," says David. Overestimating mileage can unnecessarily increase car insurance premiums. Lower mileage estimates generally secure better rates. Estimate conservatively, but be honest. Some auto insurance discounters require a vehicle monitoring device which tracks your exact mileage.

If you need to prove that you really do drive very few miles, take your car to a few shops that provide free safety inspections within a 30-day period, and keep the paperwork showing your odometer readings.

2. Teen drivers

Parents of newly-licensed teen drivers are often shocked by how much their car insurance rates spike once they add Junior to their policy. One way to put off paying more is to keep your teen on permit status as long as possible (ignoring the howls of protest). Permitted drivers don't increase your premium, but once licensed, the driver must be added to your policy.

If you need car insurance for teens and want cheap auto insurance quotes, consider enrolling your young driver in an approved defensive driving course. You may reduce your costs, and more importantly, avert an accident. Make good grades a requirement before allowing your teen to get his or her driver's license. This could accomplish two goals: Improving your child's study habits and getting a good student driver discount.

One activity that can raise your premiums through the roof or even get your car insurance policy canceled is allowing your family vehicle to be used for business activity. If your teenager delivers pizza or newspapers using a personal vehicle, that may be considered a business use. Consider yourself warned.

3. Driving record

Be truthful when asked about your driving record. It will be verified.If something shows up in your record that you didn't disclose, you may not only get a higher rate, but your omission could add a 15 percent penalty to your premium.

If you have some serious flaws in your driving record, don't take the first policy you're offered. Individual insurance companies view various incidents differently, and some penalize you less than others. It's important to shop for auto insurance quotes and compare all your options. Start researching now!

4. Credit score

Insurers check credit because there is a proven relationship between bad credit and more expensive insurance claims. According to the National Association of Insurance Commissioners (NAIC), three states don't allow credit data to be used in auto insurance pricing decisions: California, Hawaii and Massachusetts. In states that allow credit data to be considered, 92 percent of insurance companies check your Credit Based Insurance Score (CBIS) before providing an auto insurance quote.

Besides improving your credit rating, you can present your application in the most favorable possible light. The CBIS is used to only rate the primary insured, so it may be wise to list the household member with the best credit record as the primary insured. To see which one of you this is, compare separate car insurance quotes for identical policies from the same insurer. If getting the quotes online, use different IP addresses, because many companies capture this information.

Understand that insurance companies do not penalize those with low credit scores in an identical fashion.Some insurers have draconian tiering systems that add thousands to the insurance rates of those with bad credit;others are more forgiving, increasing base rates by a few hundred dollars.

Finally, if your credit score is in the gutter because of circumstances over which you had little or no control, like company layoffs, the death of a family member, medical problems, or identity theft, ask your insurance company for an" extraordinary life circumstances" exception. If you get it, your bad CBIS score shouldn't increase your rate.

5. Insurance gaps

You know the old saying, it takes credit to get credit? Well, it takes having insurance to get a good rate on new insurance. When you shop for auto insurance, you'll be asked if you currently have insurance (the "proof of insurance" or "POI" question). If you let your old policy lapse for more than one day, your new rate could be expensive. Most insurers give you 24 hours to find new coverage before penalizing you -- use this time wisely.

There is an exemption for active-duty military service-members. In that case, you're considered insured if you've been deployed or away for training as long as you obtain insurance within 30 days of your return.

What if this is your first auto insurance policy? You will pay more, but perhaps not for long. David recommends getting a friend or relative to add you to their coverage on a temporary basis. The higher their liability limit, the more helpful this will be for you, because when you shop for your own policy shortly thereafter, you can truthfully say that you are insured and that you have high limits. Your rates should be much lower if you do this.

In any event, if your first policy is expensive because it's your first policy, you don't have to keep it. You can replace your insurance any time you want and as often as you like. You do not have to wait until your renewal period. Get your first policy, preferably with high liability coverage, then shop for discount auto insurance quotes that provide a better deal.

See how much YOU can save


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