Unlike many everyday purchases, a car comes with an ongoing cost. Fuel, maintenance, and taxes make up just some of the ongoing costs of owning a car. With your insurance added in as well, the cost of owning a car becomes very expensive, both in the short-term and over time.
There's no denying that having a car is expensive, A 2019 study by AAA totaled the cost of owning a car as $773.50 a month - that's $9,282 a year! But there is one area where you can save money - your insurance.
In this guide, we'll tell you everything you need to know about auto insurance discounts to help you save money and keep costs down in the future.
- How discounts affect your car insurance rates
- Types of car insurance discounts
- How much can I save with discounts?
- Tips to get the best car insurance discounts
- Getting the right discounted auto insurance
How discounts affect your car insurance rates
Many of the costs of running a car can’t be avoided. Monthly finance payments and fuel costs, for example, are pretty fixed. But through the discounts available on your car insurance, you could make a significant saving that could make owning a car much more affordable.
Your car insurance policy will be priced up based on different criteria. Your driving behavior, the vehicle you drive and even where you live will determine what is known as your Base Rate.
If you have any tickets or driving violations, and a history of claims, these will be factored into your policy as Surcharges used by the insurer to cover themselves against the increased risk.
But the various Discounts available through various policy areas can affect your overall policy total, helping you make those savings.
Many insurers apply discounts automatically, such as a no-claims or accident-free history. However, others, such as being a good student or completing a defensive driving course, will need to be discussed with your insurer. While you could carry out your initial research online to help you find a quote, a phone call with an adviser allows you to state your case for a reduced policy.
Discounts can also vary depending on the state you live in. While states including New York, Kansas, Florida, and Virginia mandate a defensive driving discount for all drivers, other states such as California, will only mandate the discount for those aged 55 and over. Some research into your state’s regulations can help make sure you benefit from the best discounts.
The importance of providing accurate information to your insurer
It’s important to be honest about your details to make sure you’re given the appropriate insurance quote. The consequences of lying on your insurance application include fines, cancellation of your policy, or even civil fraud action. Even if you don’t intentionally provide inaccurate or incorrect information, you could face action when you make a claim. The difference in what you’d have to pay for your premium will be negligible compared to the potential penalties you could face for incorrect information.
Some of the common omissions that people make on their insurance applications include failure to disclose tickets or accidents, false information about the primary driver, your address, and even how many miles you drive annually. While you might think your risk of having an accident is low, it’s not worth the risk of providing the wrong information. An accident can happen at any time and could leave you seriously out of pocket.
Types of car insurance discounts
There are multiple types of car insurance discounts that you could apply to save on car insurance. There are four main categories of car insurance discount based around:
Some of the discounts available will be related to your performance and behavior as a driver, while other discounts can be based around the type of vehicle you have, and actions you’ve taken to improve your driving.
Discounts for Driver Safety
Defensive Driving discounts
You can find relevant, certified defensive driving courses through the National Safety Council. When building your premium, your insurer may ask if you've completed a course, or it could be up to you to volunteer this information to help you earn a discount.
The cost of the course can vary according to the provider and the state you live in, but with most courses costing no more than $30, and a potential saving of 5-15% on your insurance, it's a no-brainer for helping you lower your auto insurance.
Good Driver discounts
Being a good driver can automatically help you earn a lower insurance premium. You can demonstrate this by remaining accident-free and avoiding traffic violations. The types of discount will vary between insurers and between states, but in California, for example, drivers who meet the ‘good driver’ criteria must be given a 20% discount on their car insurance.
Low use discounts
When building your car insurance quote, you'll be asked for your estimated annual mileage. Insurers favor those who use their car less. With the average annual mileage being 13,476 miles, you could earn a significant discount on your car insurance by driving half or even three-quarters of that amount.
Discounts for Driver Status
Senior driver discounts
Older drivers are considered less of a risk to insure than younger ones, and you could earn a discount of up to 10% if you're aged 55 or over.
If you work for the military, you could qualify for an insurance discount. Some insurers will also provide a significant discount (up to 90%) on your insurance while you're deployed, which can help you cut your car ownership costs while making less use of your vehicle.
Students away-from-home discounts
If you're the parent of a child who's usually insured on your policy, you could benefit from a saving on your policy once they go away to study. Provided they don't have access to a car and live at least 100 miles away, you could save up to 25%.
Some people can qualify for discounts on their insurance because of affiliate deals through their employers, organization memberships, and other schemes. It's worth checking any employee benefit programs your workplace has to see if you can qualify.
Good student discounts
Being a good student can earn you a good discount on your car insurance. Good student discounts can be worth up to 25% if you can provide evidence of your school record.
As a homeowner, you could save up to 3% on your car insurance. You could save even more as a result of having your home insurance with the same provider - a process known as bundling (see below).
Bundling (multi-line discount)
By purchasing multiple policies (car, home insurance, health, etc.) with the same provider, you could earn a discount and other rewards with your insurers. Some of the best bundling policies come from State Farm and Allstate, providing you with up to a 17% saving.
Having multiple cars insured by the same provider can help you save on your overall insurance costs. This can apply to people within the same family and even people who share an address. Having one insurer also helps keep things neater for your finances, with just one payment to make for all of your vehicles.
The way you choose to pay for your insurance can also help you save some money. Paying upfront, going paperless, and even renewing your policy early can qualify you for a bonus with your insurers.
Having anti-lock brakes fitted to your vehicle could help you enjoy saving on your insurance. For older cars without modern safety features as standard, adding restraints such as airbags and seatbelts could help you save money, and make your car safer to drive too.
In some cases, the cost of adding these features can outweigh the saving on your insurance, so a discount shouldn’t be the sole reason behind these additions.
Anti-theft devices help give you peace of mind, while also reducing your insurance risk. Anti-theft discounts can save you around 10% on your insurance, but their initial cost could mean that you spend more money than you get back.
New car discount
Newer cars can be cheaper to insure than older cars, as they are fitted with the latest safety devices and come with long warranties. Cars under three years old could qualify for a discount of around 10%, but you’ll want to consider the cost implications of buying a new car before you decide to chase this discount.
How much can I save with discounts?
As you can see from the above, there are many ways you can benefit from a discount on your car insurance. Discounts can be awarded for all kinds of behaviors, including being a good student or a good driver, while others will depend on your loyalty and driving history.
Some discounts can be as low as 2%, others could be very generous and save you up to 30% on your insurance. While multiple discounts could be applied at once, some insurers will cap the maximum amount of discount you could receive at 25% or less.
Seeing the discounts available can prompt you into taking action to either change driving behavior, or spend some money to complete courses, for additional maintenance, etc. But when choosing which discounts to pursue, you should always look at how much you'll be spending and what the payoff will be - if the amount you save as a result is negligible, it might not be worth the effort.
With auto insurance discounts, there's a strong sense of 'if you don't ask, you don't get', so it's always worth enquiring as to what discounts you could be eligible for during a conversation with your insurer.
Tips to get the best car insurance discounts
Understanding the different types of car insurance discounts can put you in a better position to negotiate with your insurers. Each time you renew your car insurance, you could save even more money than the previous year, benefiting your budget and ensuring you don’t pay over-the-odds for your car.
Here are seven tips for getting the best car insurance discounts:
1. Research the discounts most applicable to you
With so many discounts available, you could find yourself eligible for several on your insurance policy. Working your way through the list and being prepared in time for your renewal could help you negotiate a better deal.
After making your initial comparison, a follow-up call to your insurer will help you outline the different criteria you believe you meet. It could be worth trying this tip with multiple insurers to help you find the best overall deal.
2. Improve your driving
By working on being a better driver, you could easily save money on your car insurance. defensive driving courses and accident-free records can earn some significant discounts with insurers, helping you save money overall.
These sorts of investments in your driving will not only save you money but could help you become a more confident driver too.
3. Go green
Green or hybrid vehicles provide all kinds of money-saving benefits. Not only do some insurers favor them, but they can also help you save money on fuel costs while benefiting the environment too.
Investing in a newer vehicle could help you benefit from a range of discounts, including new car discounts and having anti-lock brakes fitted as standard.
4. Consider the rest of your household
If your family has multiple vehicles and drivers, then switching to one combined policy could make things more affordable, enabling you to benefit from multi-car discounts and streamlining your payments. You could also try combining all of your insurance products under one insurer to help you make further savings.
5. Pay upfront
Paying upfront for your insurance can be an easy way to help you save money on your car insurance. If you can afford it, you could easily make a saving of around $50 a year by paying upfront, while paperless billing could also save you up to 3%. It costs the insurers less to process one payment, and make the process easier for you too. Who wants to worry about multiple monthly payments when you could just clarify what you owe in one hit?
If you can adjust your budget, making the switch to a one-off payment can benefit you financially.
6. Change your driving habits
While some discounts are affected by your age, where you live and the type of car you drive - many are determined by you and your driving behavior. By deciding to drive less, you could benefit from the low usage discounts that make insurance cheaper, while also spending less money on fuel too.
Even if you’ve had an accident or had to claim your insurance, you can make the effort going forward to drive better, and potentially earn those savings again in a couple of years.
7. Compare your insurance annually
Sticking with the same provider seems like the easy, sensible option - but loyalty isn’t always as well-rewarded as it could be. Choosing a different provider who can offer you a better deal will save you money and potentially provide you with different benefits too.
Think carefully about the provider you choose - research them by comparing insurance quotes and reading reviews from existing customers. Remember, if a deal sounds too good to be true, it most likely is.
Getting the right discounted auto insurance
Earning discounts on your car insurance can save you money, but you must choose the right insurance for your needs, not the lowest price point.
The cheapest insurance isn’t necessarily the best, and you need to think about what you can afford to pay if you’re involved in an accident. You’ll need to consider your needs carefully and make sure you choose the right insurance for you and the vehicle you drive. Make sure you choose the right level of cover and assess your needs annually to ensure you have the right insurance for you.
You can find the right discounted auto insurance easily with a car insurance comparison tool. By comparing quotes from different providers, you can get the help you need to find the right insurance quickly and easily and take advantage of the discounts available.
A comparison tool will give you quotes from the largest insurance providers in the US (Geico, Progressive, Farmers, State Farm, Allstate, and Liberty Mutual), as well as quotes from other providers - giving you the clearest breakdown of what’s available. After selecting your cheapest quotes, you can then go ahead and negotiate your rate based on your qualifying discounts.