Auto Insurance: Tricks For Discounts

Auto insurance is legally required in most states, and it can be expensive. However, there are many ways to get discounts on your auto insurance and lower your costs. Discounts are one of the best ways to reduce your car insurance expenses. Insurers offer a wide range of discounts based on factors such as your driving habits, occupation, and payment method. Here are some common ways to get discounts on your auto insurance:

Safe driver discounts

To be eligible for a safe driver discount, it is important to maintain a clean driving record. This means avoiding traffic violations such as speeding, reckless driving, driving under the influence (DUI), or any other incidents that could result in a claim. Insurance companies consider drivers with no at-fault accidents, no major comprehensive claims, or no points on their driver's license as a result of moving violations to be safe drivers.

Some insurance companies offer accident-free discounts, violation-free discounts, or a combination of both. For example, if you have had no accidents or violations in the past three to five years, you may qualify for a discount. Additionally, enrolling in a defensive driving course can also help you qualify for a safe driver discount. These courses are designed to educate drivers on safe driving techniques and can result in significant savings on your car insurance premium.

Usage-based insurance or telematics insurance is another way to obtain a safe driver discount. This type of insurance monitors your driving behaviour through a mobile app or a device installed in your car. The insurance company will then offer you a discount based on your driving performance. For example, State Farm's Drive Safe & Save program offers an initial discount just for enrolling, and you can save up to 30% based on how safely you drive.

It is always a good idea to check with your insurance company or a local agent to understand the specific criteria and requirements for obtaining a safe driver discount. Safe driving habits not only help keep you and others safe on the road but can also result in significant savings on your car insurance premium.

Student discounts

Students can get discounts on their car insurance premiums by getting good grades, bundling policies, or through their university, fraternity, or sorority.

Good Student Discounts

Every major car insurance company offers a good student discount. This discount is for around 10% to 15% off your premiums, and is given to student drivers who can demonstrate that they do well in school. Both high schoolers and full-time college students under the age of 25 are eligible.

To get a good student discount, you'll need to show proof of your achievements. Car insurance companies may consider you a good student if you can show one of the following:

• Good grades: Depending on your insurance company, you may need a grade average of B or a GPA of 3.0
• Good standardized test scores: You’ll have to show your insurance company your test scores on the SAT, ACT, or PSAT
• A letter signed by an administrator testifying to your academic achievements
• A class ranking in the top 20% of your class
• Dean’s list or honor roll

Driver's Education and Training Programs Discount

Completing a driver's education class can help reduce premiums for new and teenage drivers. Check with your high school or other participating organizations to see how to sign up for classes. You may also be able to get a discount for completing additional driver's education, like a defensive driving course.

GEICO, for example, offers its own driver training program for young drivers. State Farm's program is called "Steer Clear" and is offered to students under 25. It tracks your driving, includes informational quizzes and videos, and offers a discount upon completion.

Distant College Student Discount

This isn't a discount for a student but for the parents or guardians of that student. If you attend college that is significantly distant from your parents' home, your parents can get a discount on their car insurance. This applies when you're attending and living at a college or university away from home and you don't have your own vehicle, meaning you're only likely to drive your family car when you're at your parents' home over school breaks.

Affinity Discounts for Students

Many students are affiliated with other groups or organizations. Depending on your insurance company, your group affiliations may result in car insurance discounts.

Sorority, Fraternity, and Honors Society Discounts

Some insurers, like GEICO, offer discounts to members of certain fraternities, sororities, and honors societies. GEICO lists dozens of such organizations as eligible for the discount. Check with your carrier to see if they also offer a discount, and your respective frat or sorority may have additional information.

University and Alumni Discounts

In addition to discounts for belonging to a sorority, fraternity, or honors society, you may get a discount simply for going to certain universities or for being an alumnus of one. Not every university participates in this program, so you should check with your insurance company or university administrative office for more information.

Affinity group discounts

Insurance companies offer these discounts to encourage members of these groups to purchase their insurance products. By partnering with these organizations, insurance companies can gain access to a pool of potential customers who are often considered less risky and, therefore, eligible for better rates. Affinity group discounts typically provide savings of around 3-5% or $40-$60 per year.

It's worth noting that affinity group discounts may not be available in all states due to insurance regulations. Additionally, it's always a good idea to shop around and compare rates from multiple insurance companies, as the availability and amount of affinity group discounts can vary.

To take advantage of affinity group discounts, you may need to take the initiative and inform your insurance agent about your group memberships. By doing so, you can ensure you're getting the best possible rate on your auto insurance.

Vehicle equipment discounts

Anti-Theft Devices: Insurance companies offer discounts for cars equipped with anti-theft technology, such as Onestar, Lojack, or Teletrac Navman. These systems help prevent car theft and assist in recovering stolen vehicles. Having such a system in your car can earn you a discount of up to 25% on your comprehensive coverage. Some companies, like Direct Auto, offer an anti-theft recovery discount of up to 10% for cars with active recovery devices or tracking systems.

Alternative Fuel: Driving a hybrid, electric, ethanol, or flex-fuel vehicle can often result in a discount on your insurance. Insurance providers encourage the use of alternative fuel vehicles, which can lead to reduced rates.

Passive Restraints: Automatic safety devices like airbags play a crucial role in reducing injuries during collisions. As a result, insurance companies may offer a passive restraint discount, which can be applied to the medical payments or personal injury protection portion of your policy. Airbag discounts can be significant, with savings of up to 40% in some cases.

Anti-Lock Brakes: Cars equipped with anti-lock brakes can stop quickly and efficiently, reducing the risk of accidents. Insurance companies recognize this safety feature and may offer a discount of up to 5% on certain coverages for vehicles with two-wheel or four-wheel anti-lock brake systems.

Electronic Stability Control (ESC): ESC systems help prevent rollover or skidding by diverting power from wheels with reduced traction. Having an ESC system installed in your vehicle can lead to lower insurance costs, as it enhances safety and reduces the likelihood of accidents.

Daytime Running Lights: While the discount for daytime running lights is typically small, it can still contribute to overall savings. Vehicles equipped with daytime running lights as standard equipment may be eligible for a discount of around 3% on certain insurance coverages.

New Vehicle Discount: Insuring a new vehicle can also result in savings. Some insurance companies offer discounts for vehicles that are less than three years old, with potential discounts of 10% to 15% on certain coverages.

Remember, the availability and amount of vehicle equipment discounts may vary depending on your insurance provider and location. Be sure to review your policy and discuss any applicable discounts with your insurance agent to maximize your savings.

Premium pay discounts

Paying your insurance premium in full upfront is a great way to save money on your auto insurance. This is known as a "paid-in-full discount", and it can save you between 5-10% on your yearly insurance premium. Some companies offer even higher discounts, such as Progressive, which offers an 11% discount for paying upfront.

The paid-in-full discount is a great option if you have the financial means to pay your premium all at once. By doing so, you can avoid the interest charges that may come with financing your insurance through monthly payments. Additionally, paying in full gives you more payment freedom, as you only have to think about paying for insurance once or twice a year.

However, it's important to note that paying in full may not be the right choice for everyone. For some, the steep upfront payment may be unaffordable or tie up funds that could be used for other purposes. In these cases, it may be better to opt for monthly installment payments or another payment plan offered by your insurance company.

Another way to save on your auto insurance is to set up automatic premium payments. Some companies offer discounts for policyholders who choose this payment method, which can typically be done through electronic funds transfer (EFT) or recurring payments using a debit or credit card. Not only can this help you save money, but it also ensures that your coverage remains active and prevents any lapses in payment.

Overall, there are several ways to save on your auto insurance premium through premium pay discounts. Be sure to ask your insurance company about the specific discounts they offer and choose the payment option that best suits your financial situation.

Frequently asked questions