Whether you’ve just passed your test or you’ve been driving for a long time, there are discounts available on the market that you should be aware of before you begin hunting for a new car insurance policy. Comparing quotes from different insurance companies can save you some serious cash. In fact, a survey conducted by Insurance.com found that quotes differed up to as much as $1,144, for the same driver, with the same car, and the same cover type.
Luckily, for you, we’ve compiled a comprehensive guide to car insurance discounts for you so that you don’t miss out on any potential savings whether you’re taking out a new policy or renewing one. We’ve split the various discounts into different types available, outlined who is eligible, and what the typical discount amount is. Keep reading to find out what discounts you should expect from your future insurer, and remember you may even qualify for more than one.
How Your Insurance is Calculated
- Base (1) + Surcharges (2) – Discounts (3) = Yields Premium (4)
The base rate of your insurance policy, before any discounts or surcharges have been applied, will depend on some risk factors that take into account what level of risk you personally present the insurance company. In this respect, it will obviously cost more if you want to insure a faster, more expensive car, just like it will cost more to insure you if you are a new driver.
Any surcharges will then be added to your total. Surcharges will be added, according to your driving record and any moving violations you have.
After your base rate and any surcharges have been determined, any discounts that you have proven yourself to be eligible for (see list below), will be taken away from your total. Your monthly or annual premium will then be worked out using the final figure from the above calculations.
Different Types of Car Insurance Discount
Not all companies will offer discounts for the factors listed below, and even if they do, they may cap your total discounts allowed. The best thing to do is to find out which areas you could be eligible for discounts, and then speak to a company that offers discounts in those sectors.
1. Car Related Discounts
Discounts may apply depending on the car you drive and the equipment it has installed. This is due to the direct risk the insurer is taking based on how well equipped your car is to prevent a payout from happening.
- New cars (under three years old) – approx 10%: Discount may be applied because less is likely to go wrong with your car if it’s brand new.
- Electric and hybrid cars – approx 10%: Some insurers will offer a discount for a car that runs on electricity as opposed to gas. Electric cars are still more costly to insure overall since they cost more to buy.
- Anti-theft technology (alarms, kill-switches, tracking systems) – between 5% and 20%: If your car is fitted with equipment that deters thieves, then the insurance company could offer a discount as they are less likely to have to pay out in the event of theft, as your car is less likely to be stolen.
- Safety features (ABS brakes, airbags) – between 5% and 10%: Technology that keeps you safer when you drive is also likely to help the insurer and you, save money.
2. Demographic Discounts
An insurance company will also assess your eligibility for a discount based on your demographics. This is based on data that suggest that some demographic groups get into fewer accidents, so they make fewer claims than other groups.
- Students – between 7% and 30%: Discounts are often offered to high school or college students with a minimum average grade of 3.0, assuming that these students are more responsible and will be more careful and considerate drivers. Also, if a student is living away from home without regular access to their car, larger discounts may apply for greater distances.
- Homeowners – between 5% and 15%: Homeowners exude stability. Insurance companies view customers that own their own home as more likely to be “responsible people” compared to those renting or living with parents. As such, they present a lower risk of accidents happening.
- Low Income – varies: If a company offers discounts for low-income drivers or families, then it is likely to be state-mandated and will vary greatly from state to state.
- Senior – between 15% and 35%: Another discount that is more often than not state-mandated is for seniors. In some states, the discount will apply automatically when you turn 65 years old, while in others, you may be asked to complete a driving refresher course before you can get the discount.
3. Advanced Driver Training Discounts
A decent discount is often available for drivers who have participated in more advanced driver training. Better training will theoretically result in you becoming a better driver that is involved in fewer accidents. While the whole cost of the course isn’t necessarily saved through the discounts returned to you, there are many other benefits to completing these courses.
- Defensive driving course – approx 10%: State-approved courses may offer seniors, teenagers, or inexperienced drivers extra discounts upon successful completion.
- Driver’s education course – approx 10%: Drivers Ed courses are aimed at helping drivers under the age of 21 years old attain discounts for furthering their driving education, making them safer drivers from the get-go.
4. Driving History Discounts
Insurers will often reward you with discounts based on you having a clean driving record and having never had to claim on an insurance policy before. If you’ve claimed your insurance policy every year since owning a car, they will, of course, deem you to be a higher risk customer.
- Clean accident record – approx 5%: This is based on how many accidents you’ve claimed for, as opposed to how many you’ve actually been involved in. Also called a “no claims bonus”, your insurance company may reward you for never having cost them any money in the last three to five years.
- Good driver record – approx 20%: If you’ve not been “at fault” in any accidents in the last three to five years, then you may qualify for a hefty discount based on your great safety record. Your good driving record will also take into account any breach of traffic laws.
- Low-mileage record – approx 2%: If you drive your car less than 15,000 miles per year, then you may qualify for a small discount based on lower usage, leading to a lower risk of accidents.
5. Driver Affiliations
Some insurance companies will strike deals with specific companies and groups, on a local and national level, to offer discounts to people who are affiliated with them.
- Membership – approx 25%: You may find yourself eligible for discounts on car insurance (among other things) by being a member of a certain club, society, or team. It’s also worth checking with your school or employer to see if they arrange any discounts for their employees.
- Roadside assistance – approx 5%: A lot of major insurance companies offer roadside assistance either as part of their package deal or as an add-on. If you already have roadside assistance coverage elsewhere, then you may be eligible for a discount.
- Military – approx 15% (or up to 90% if deployed): If you are in or retired from the Military, you should be eligible for discounts with some insurers. They also extend this discount to people serving in the National Guard and Reserves. The discount increases dramatically if you are deployed in another country, as you won’t be using your car while you are away.
6. Customer Loyalty
As a reward for committing to, staying with, or giving a particular insurance company more business, you may be offered a discount for customer loyalty. As with all discounts, though, don’t assume you will receive it just by staying; you should ask for it specifically each time.
- Early commitment – approx 10%: Some companies will be keen to get you signed up early so that you are committed to them and can’t be lured off by a better deal elsewhere. This goes for new sign-ups and renewals.
- Multi-policy – between 5% and 10%: Most larger companies that can offer you car insurance often have a range of other insurance options available, such as home insurance, pet insurance, and life insurance. By taking more than one policy out with the same company, they will often help to save you money on each policy, by spending more money with them overall.
- Multi-car – between 10% and 25%: As with multi-policy, multi-car discounts can be obtained by insuring more than one car with the same insurer. Spend more, save more.
- Renewal – between 15% and 25%: It’s easier for companies to keep your business year after year, rather than have to win new clients to replace you every year. You may be offered a discount for your loyalty to them as your preferred car insurer, with the discounts increasing slightly each year that you stay with them.
7. Payment Plan
No-one likes to be paid late. In all cases, your insurance company would rather have your money in their bank, sooner rather than later.
- Automated payments – approx $50 per year: If you set up auto-pay for your car insurance premium, then it will come out of your bank automatically each month, and your insurer may offer you a small amount of discount to encourage you to do so. As such, you’re not ever late paying their premiums, and they don’t have to chase it up every month.
- Paperless – approx 3%: Save the environment and some cash. As with many companies these days, your car insurance company may offer you a small discount to go paperless so that they save money on sending you paper bills and updates in the mail. All your dealings with the company are instead conducted via email.
- Upfront “Paid-in-full” payment – between 5% and 10%: The option that is most preferred and rewarded when it comes to payment is if you pay for the whole insurance policy up-front. Payment for the entire policy length, when you take the contract out, ensures that they never need to chase you for payments. And of course, by having the cash in their bank account all year, instead of yours, they will earn any interest accrued.
Top Tips to Receive Top Discounts
1. Know Your Discounts
Read and get to grips with your comprehensive guide to car insurance discounts. Be sure to know where your potential discounts could come from before you start looking.
If you don’t ask, you don’t get anything.
That’s right folks, quite often, you’re eligible for some of the discounts above, but if you don’t ask if they exist, and ask for them to be applied to your policy, then it’s unlikely you’ll receive them.
Insurance companies, like any other, exist to make money. The less discount they can get away with, the more money they will make.
2. Look at the Overall Price
Look at the quote as a whole rather than the amount of discounts you get. If one company gives you more discounts but starts at a higher price, then your premiums could be higher, even though they are “saving you” more money.
3. Shop Around Every Year
Deals and discounts change every year and being loyal to one insurance provider and receiving a bonus for that customer loyalty may not be as good as something new offered by another provider. There are quite a few websites online now where you can enter your information and receive several quotes at once, so make use of them to save time.
Compare the Market
We hope you’ve found our comprehensive guide to car insurance discounts helpful in navigating your way through a large and diverse market of insurance providers. Read through the guide carefully to check what discounts you might be eligible for before beginning your search. Remember to carefully check what each policy covers as the cheapest option may not necessarily present the best value for money.
Also, check that you are getting the best price every year that you sign up for new car insurance. You can save yourself some time by using comparison websites that do all of the hard work for you, and remember that it’s worth the search as you could save yourself a four-figure sum by switching up.