6 ways to save on car insurance

Table of Contents

Key points

  • Most insurers offer discounts to help lower your car insurance rates.
  • You might qualify for discounts based on your policy decisions, driver profile, vehicle and driving habits.
  • Discounts range in value, with some offering as little as a 1% break while others may save you up to 40%.
  • The price of consumer goods and services has been on the rise, and car insurance is no exception. The index for motor vehicle insurance has increased by 15% since March 2022, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index.

Most of the best car insurance companies offer at least a few discounts, and if you’re eligible for them, you may be able to secure a more palatable rate.

Whether you’re shopping for a new car insurance company or reviewing your current policy, here are some of the most common car insurance discounts to be on the lookout for.

Type of car insurance discounts available
Every insurer in our cheapest car insurance companies analysis offers multiple ways for qualified drivers to reduce their rates.

What type of auto insurance discounts are you eligible for? Each insurer has its own unique set of insurance discounts and eligibility requirements, but most discounts fall into one of these five categories:

  • Policy-based discounts
  • Payment discounts
  • Driver profile discounts
  • Driving behavior discounts
  • Vehicle-based discounts
  • Policy-based discounts
  • The most common policy-based discounts include:

Policy-based discounts

The most common policy-based deductions include:

Collection discount. Also known as a multi-policy or multi-line discount, a pool discount is available to drivers who purchase auto insurance plus an additional type of coverage from the same company.

  • Combining home and auto insurance can save you an average of 14%, according to our price analysis. You can also associate car insurance with other types of coverage, such as renters insurance, motorcycle insurance, or recreational vehicle insurance.
  • Multi-vehicle discount. Insure multiple vehicles and you can usually get a discount. Most insurance companies require applicants to be family members who live in the same household—spouse, parent, child, etc.—but some extend this deduction to unmarried couples or partners. Savings typically range from 8% to 25%.
  • Loyalty discount. Realizing that many customers shop around for the best insurance rates every two years, some insurance companies offer discounts if you stay with them for a set amount of time. While these can sometimes offer good value, you should still shop around periodically to ensure you’re getting the best price.
  • Payment discounts
  • How you pay your bill — and how often — can also help you make some savings. These discounts reward you for certain payment practices.
  • Pay in full. Many people choose to pay their auto insurance premium monthly, but choosing to pay in full for six or 12 months can earn you a discount — between 6% and 14% on average — with some insurance companies. You may also be able to save on the monthly processing fee.
  • Auto Pay Discount. Choosing to have your car insurance payments automatically deducted from your bank account can qualify you for an auto-pay deduction with some insurance companies. As a bonus, it also eliminates the risk of your policy being canceled because you forgot to pay your bill.
  • Paperless discount. If you choose to have your billing statements and policy documents delivered directly to your inbox instead of by email, you may be eligible for a discount. Switching to paper also makes it easier to keep up with your proof of insurance and access the terms of your policy. Discounts vary between insurance companies, but we’ve found the average discount to be around 3%.

Driver profile discounts

Driver profile discounts take into account who you are as a policyholder. Factors used can include your age, academic status, military affiliation, or organizational affiliation.

  • Military discounts. Many insurance companies reward members of our armed forces with special discounts for active duty, reserve, and retired members. If you or someone on your policy is a military member, ask your insurance company if they offer a discount. If not, shop around and see if other insurance companies offer auto insurance discounts or more competitive rates based on your military affiliation.
  • Good student. This discount recognizes students ages 16-25 who maintain good grades in high school and/or college. To qualify, most insurance companies require students to maintain a grade point average of “B” or higher. Discounts vary but are usually between 8% and 25%. Many insurance companies offer this discount, including Nationwide, Travelers, Geico, and others.
  • big sale. Some insurance companies offer auto insurance discounts for drivers who are 55 or older. Senior drivers often see higher rates as they enter their 70s, so if you or someone on your policy is in this age group, ask about available savings.
  • Organizational affiliation or discounts. Some insurance companies offer discounts for policyholders who are affiliated with a specific organization, such as an employer, professional association, or even your alma mater. For example, Geico partners with alumni associations, college conferences, and student organizations to offer members insurance discounts.
  • Driving behavior discounts
  • Insurance companies base a lot of decisions on your habits behind the wheel, and if you’re a good driver or practice other safety habits, that can translate into a discount.
  • Good driver discount. Many insurance companies reward policyholders who go through a set period of time without a moving accident or violation on their record. If this sounds like you or someone in your household, it’s good to know if you qualify. Discount terms vary from insurance company to insurance company.
  • Accident free discount. For your insurance company, not being in an accident for a set period of time means you’re less at risk when it comes to claiming payments. This driving record can earn you a lower rate, though the exact deductible and accident-free period requirements vary by insurance company.
  • Insurance deduction based on usage. UBI programs allow insurers to monitor your driving habits, including speed, braking, and distance traveled and base your rates on the information collected. Data is usually collected through a mobile app or other system. Typically, satisfactory driving habits will entitle you to a discount of between 5% and 40%. For example, if you sign up for State Farm’s Drive Safe & Save program, you can save up to 30%.
  • Discounts on the driving course. Driving courses can help you improve your habits behind the wheel, and many insurance companies entice you to complete them by offering a discount. Many discounts are available on driving courses for different types of drivers. Some insurance companies offer this discount to drivers of any age, while others may extend the discount to teen or senior drivers who complete specific courses.

Discounts based on vehicles
It’s not just how you perform behind the wheel that can earn you lower rates. You may also be able to get a discount when your car meets certain criteria or has certain features.

New car discount. If you drive a car that is less than three years old, you may be able to save with a new car discount. Many insurance companies, including Travellers, offer this discount. Typical deductibles range from 10% to 15%, but, like eligibility requirements, will vary by insurance company.
Anti-theft discount. Auto thefts have been on the rise since 2019, according to a recent report from the National Insurance Crime Bureau, and that can be a costly trend for insurers. Many insurance companies offer discounts for car insurance with anti-theft devices, such as GPS tracking, vehicle recovery systems, and audible alarms. Discounts range from 5% to 25% on average for comprehensive coverage.
Discounted safety features. Safety features in cars have improved greatly over the past two decades, and they now include a lot of technology that makes driving on the road safer. Features such as airbags, anti-lock brakes, automatic seat belts, and daytime running headlights may help you save.
7 ways to reduce the cost of car insurance
Discounts on auto insurance aren’t the only way to lower your premium. Here are more ways to cut costs.

  1. Shop
    Shop and compare car insurance rates to ensure you find the cheapest rate and best coverage for your needs. This is true whether this is your first time shopping for insurance or if you are already insured and are considering making a change.
  2. Increase your discount
    Your deductible is the amount the insurance company will deduct from examining claims for a covered accident. A jump from $500 to a $1,000 or $1,500 deductible lowers your rate, but make sure you’re comfortable covering more repairs yourself if you make a claim.
  3. Reduce your limits
    Insurance limits indicate how much your insurance company will cover a claim. Reducing them reduces the financial liability of your insurers and thus leads to lower rates. However, do so with caution. Reducing your limits can put you at financial risk. If you cause an accident and the cost of damages for bodily injury exceeds your limit, you can be on the hook for the difference. Most states also require minimum coverage limits by law.
  4. Drop unnecessary coverage
    Perhaps your car is now outdated and the cost of collision and comprehensive insurance is no longer justified. Or, you may have recently paid off your car loan but forgot to cancel your gap insurance policy. Either way, taking an inventory of your current policy and current needs can help you decide if you can cut some types of coverage. Of course, always make sure that the coverages you plan to cut aren’t necessary to meet state or lender obligations — or to maintain your own financial security.
  5. Consider insurance costs when buying a car
    Some vehicles are more expensive to insure than others, so keep that in mind when buying. Before you get to the parking lot, get online quotes for the insurance policy(s) for the car(s) and make you are considering.
  6. Switch to pay-per-mile insurance
    If you usually walk, bike, or rely on public transportation to get to your destination—or aren’t behind the wheel much—consider pay-per-mile coverage. This type of coverage bases your rate on miles driven, which means you can save if your car is parked more than once.
  7. Improve your credit
    Some insurance companies include a credit check when developing a policy premium as a way to assess risk. Drivers with higher credit scores may qualify for lower rates, as insurance companies see them as less risky. Paying your bills on time, reducing debt and lowering your credit utilization rate can help improve your score.

Leave a Comment

Your email address will not be published. Required fields are marked *

Shopping Cart