If you are looking for the lowest rate on your car insurance, one great way to save money is by maximizing your discounts. Car insurance companies typically offer a variety of discounts, but the specifics vary between insurance carriers.
Car insurance discounts can cut your total policy premiums down anywhere from 10% to 45%, depending on the insurer and the discount types. Learn about some of the most common discounts that may be available to you.
This is one of the biggest discounts available on a car insurance policy. Also known as bundling, this is when you purchase multiple types of insurance from the same insurance company. For example, you might buy home and auto insurance.
Some insurance companies offer a bundling discount as high as 20%. It is rare for someone to obtain cheaper insurance by separating their car and home insurance through different carriers. If you own a home, consider finding an insurance carrier that packages your car and home policies together.
This is another significant discount. Your overall rate is typically higher when you insure two vehicles rather than one, but per vehicle, you are paying a cheaper rate compared to insuring the vehicles individually.
For example, if you own two vehicles, you might pay $1,000 annually for one policy and $1,200 for the other if you bought them from different insurers. With a multi-car discount, your insurer might only charge you $2,000 for both.
Financial Stability Discount
An increasing number of insurers are offering this discount. The difference between a high credit score and a low one can mean a difference of hundreds of dollars each year.
Insurance companies have done extensive studies that show a correlation between low credit scores and high claim activity. According to Nationwide, credit is a contributing factor to determine auto insurance rates for 92% of insurers. Insurance companies reward good credit scores with a financial stability discount in hopes of low claim activity.
Good Driver Discount
This discount is for drivers who have not had an accident or ticket in the past three to five years. It's almost a combination discount because someone with a spotty driving record doesn't qualify for the good driver discount and may be charged extra for auto insurance.
The good driver discount is usually applied per driver. Every driver in the household could potentially receive this discount, greatly reducing the overall expense of car insurance.
Good Student Discount
As the name implies, this discount only applies to students who get good grades. Usually, a "B" average or 3.0 grade point average or better is accepted. College students typically need to be taking 12 credit hours or more to qualify.
Young drivers often pay higher rates, so insurance companies reward good students with a discount. The reason is that young drivers who are responsible with their grades may also be responsible with their driving.
It might be surprising that owning a home gets you a discount on your car insurance. Insurance carriers often offer this discount to clients regardless of whether the home is insured with the same company.
Insurance companies reward homeowners because they often have more stability than a renter. A homeowner can double dip with this discount by combining it with the multi-policy discount.
Don't Discount These Discounts
If you don't qualify for all of the above discounts, there are still plenty of other options available. It pays to ask each carrier which of their discounts will lower your policy costs the most.
Ask about additional discounts for these situations:
- Completion of an approved defensive driving course (in some states)
- Military personnel—active, currently deployed, or retired
- Affiliation with various groups through employment, service, or membership
- Car safety features, such as extra airbags, anti-lock brakes, and theft-deterrent systems
- A customer loyalty discount
- A tracking device discount
Review your car insurance policy to verify qualifying discounts are listed. It's best to review your insurance at least once per year and ask your insurance company if you're eligible for any new discounts.
When you're shopping for insurance, keep in mind that women often get lower rates. Keep your credit score and driving record in check for the best rates.