Types of car insurance discounts
Auto insurance discounts fall into a few categories, and there may be dozens of possible discounts within those categories. The categories range from auto insurance discounts for your driving habits to car features.
Here is a summary of different car insurance discount types by category.
Auto insurance discount types
| Policy | Driver profile | Vehicle |
|---|---|---|
| Multi-policy (bunding) | Safe driver/good driver | Anti-theft device |
| Multi-car | Low mileage | New car |
| Early signing | Student (Good, away from home) | Safety features |
| Paid-in-full | Usage-based | Green/hybrid |
| Electronic billing/paperless billing | Senior/mature driver | |
| Loyalty | Profession/occupation/group membership/education | |
| Driver ed/defensive driving |
Common car insurance discounts and savings
A lot of common auto insurance discounts may be available to you. These are car insurance discounts to ask for when shopping around or from your current insurer. Car insurance discounts may vary by state, vehicle, driving record, credit history, and other factors.
| Discount | Eligibility | Typical amount | Category |
|---|---|---|---|
| Good/safe driver | Drivers with a clean record, no tickets or accidents in the past three to five years. | 10-30% | Driver profile |
| Affiliation or "affinity" | Discounts through employer, school, team, club or other membership. | up to 25% | Driver profile |
| Anti-lock brakes | Cars with anti-lock brakes. | 3% | Vehicle |
| Anti-theft | Alarms, tracking systems, and kill-switches. May have to be factory-installed. | 2% | Vehicle |
| Auto-pay | Set up automated payment from checking. | 5% | Policy |
| Bundled (multi-policy) | Discounts for having more than one type of insurance with the same insurance company. | 14% | Policy |
| Defensive driving course | May be limited to seniors, teens or inexperienced drivers. Approved course only. | 5% | Driver profile |
| Driver Training | Usually for drivers under 21. Approved course only. | 7% | Driver profile |
| Early signing/renewal | For signing/renewing before policy expiration. | 5% | Policy |
| Good student | High school or college students (under age 25) with at least a 3.0 (B) grade point average. | 15% | Driver profile |
| Green/hybrid car | Owning or leasing a hybrid or electric vehicle. | up to 10% | Vehicle |
| Homeowner | Insured owns a single-family home or condominium. | 7% | Driver profile |
| Occupation | Discounts for certain occupations, like teachers | Varies by occupation | Driver profile |
| Customer Loyalty | For policies in-force more than one consecutive year. May increase with each successive year. | 11% | Policy |
| Military | Active military personnel and their households. | 15% on base, 90% for deployed | Driver profile |
| Multi-car | Insure more than one car on a single auto insurance policy. | 10% to 25% | Policy |
| New car | Own a car that is three or fewer years old. | 10% | Vehicle |
| Paid-in-full | Pay premium in its entirety, at the beginning of its contract. | 9% | Policy |
| Paperless | View and pay your bill online. | 4% | Policy |
| Safety; passive restraint and airbag | Usually applies to older vehicles (1990s or earlier) with factory-installed airbags. | 2% | Vehicle |
| Senior | Usually state-mandated and apply to drivers over age 65. | 15% to 35% | Driver profile |
| Students away from home | Students without regular access to a vehicle, and living > 100 miles from home. | 18% | Driver profile |
| Usage or low-mileage | Driving 5k to 15k miles per year, depending on insurer. | 5% | Driver profile |
Car insurance discounts by company
Not all companies offer all discounts. Below, you’ll find a list of top companies and which discounts they offer.
| Discount type | Company 1 | Company 2 | Company 3 |
|---|---|---|---|
| Air Bags | |||
| Air Bags | 2% | 1% | - |
| Anti Theft Device | |||
| Anti Theft Device | 1% | 0% | - |
| Daily Commute | |||
| Daily Commute | 6% | - | - |
| Days Advanced Purchase | |||
| Days Advanced Purchase | - | 4% | - |
| Days Per Week Driven | |||
| Days Per Week Driven | 5% | - | - |
| Electronic Funds Transfer | |||
| Electronic Funds Transfer | - | 3% | - |
| Homeowner | |||
| Homeowner | 12% | 4% | - |
| Lower Annual Mileage | |||
| Lower Annual Mileage | 5% | 5% | - |
| Loyalty Years Renewal With Company | |||
| Loyalty Years Renewal With Company | 3% | 3% | - |
| Marital Status | |||
| Marital Status | 7% | 12% | - |
| Multi Policy | |||
| Multi Policy | 7% | 9% | - |
| Paperless Electronic Documents | |||
| Paperless Electronic Documents | - | 1% | - |
| Payment Type | |||
| Payment Type | 16% | 11% | - |
| Primary Use | |||
| Primary Use | 9% | 3% | - |
| Safety Devices | |||
| Safety Devices | 2% | 3% | - |
| Years Insured | |||
| Years Insured | 14% | 15% | - |
| Years Licensed | |||
| Years Licensed | 30% | 27% | - |
How much can I save with car insurance discounts?
As the chart above shows, safe driver, accident-free driver, student, home and auto insurance bundle and multi-car discounts are big car insurance discounts, while others might save just 2%. Advertised discounts also don't necessarily apply to your entire insurance bill. A discount might only apply to your personal medical coverage, which is a relatively small part of your policy. It's also possible that when you claim one discount, the insurer may reduce or eliminate others.
There is often a limit on the overall discount you can get on a policy; for instance, some insurers permit total discounts of no more than 25% or 30%.
Your savings may also depend on where you live; not all discounts are offered in all states. See below some examples of average savings for different types of common car insurance discounts in several states for comparison, as well as the national average.
New driver training discount
New drivers who take a driver training course can enjoy some savings. For experienced drivers, refresher courses or defensive driving training can give you a smaller discount, but every little bit can help.
| Company | Average driver training savings |
|---|---|
| Travelers | $ 225 |
| State Farm | $ 330 |
| Erie Insurance | $ 246 |
| National Average | $ 488 |
Good student car insurance discount
The good student discount for families with student drivers under 25 also varies considerably.
| Company | Average good student savings |
|---|---|
| State Farm | $ 943 |
| Geico | $ 500 |
| Nationwide | $ 1,221 |
| Travelers | $ 402 |
| Farmers | $ 1,310 |
| Auto-Owners | $ 962 |
| American Family | $ 817 |
| Allstate | $ 1,640 |
| National Average | $ 943 |
Student away at school discounts
If your child is on your auto insurance but goes away to school, you could save hundreds.
| Company | Average student away at school savings |
|---|---|
| State Farm | $ 1,465 |
| Geico | $ 956 |
| Progressive | $ 381 |
| Nationwide | $ 172 |
| Travelers | $ 208 |
| Farmers | $ 348 |
| Auto-Owners | $ 1,025 |
| American Family | $ 831 |
| Allstate | $ 1,391 |
| National Average | $ 759 |
How to get discounts on car insurance
Getting discounts on car insurance is easy; you simply have to know what’s available and then find out if you qualify. And if so, you have only to ask. Here are some simple steps to getting more car insurance discounts.
1. Know the available discounts
Make sure you know which discounts you qualify for, and then make sure they’re added to your policy.
Insurance is a business, and its goal is profit. Dan Wade, an attorney with the California Department of Insurance and formerly with the non-profit consumer advocacy group United Policyholders, talks about "insurers' increased use of 'price optimization,' which refers to how much a consumer is willing to pay for the product/how much of a price increase they will tolerate or notice before switching."
In other words, your premiums may be based on what your company thinks you're willing to pay rather than the risk you present. And they might not give you discounts unless you ask.
2. Shop around yearly – especially for discounts
Discounts vary widely by company and state, so the only way you can be sure you're getting the best deal is to compare quotes whenever you renew or change insurers. And don’t just look at discounts.
"One important thing to keep in mind is that the key to savings is not necessarily getting discounts, but the final price. A company that offers few discounts may still have a lower overall price," Loretta Worters, vice president of communications at the Insurance Information Institute says.
3. Don't spend money to get discounts
Be cautious about spending money to obtain richer discounts. For example, you might earn a discount of between 2% and 23% for fitting anti-theft devices (though some companies insist they're factory-fitted to qualify), such as tracking devices, alarms and kill switches. But some expensive add-ons earn you very little.
Tracking devices can cost you more than $1,000 but only save you well under $100 yearly.
4. Make sure you get what you need
When you're comparing quotes for automobile insurance, it's easy to focus on the bottom line and go for the lowest premium. But that's a dangerous strategy.
Senior vice president and managing director of Private Client Advisors at HUB International Patti Clement says she regularly sees how chasing those discounts without regard to other factors can lead to trouble.
"Make sure that you understand what insurance coverage you have and what your potential out-of-pocket expenses will be in the event of a loss,” she says.
And Clement warns, "Also, make sure that you carry good liability coverage, not the minimum state requirement. Many people are under-insured – not understanding that if you cause bodily injury or property damage to others, you are responsible for the damages, even if they exceed your insurance policy limits."
6. Compare quotes quickly but carefully
Comparison shopping for insurance and financial products can be daunting, but there are ways to simplify the process:
- Gather what you need to get quotes, including driver and vehicle details, to make sure the quotes are accurate.
- Get car insurance quotes from multiple companies.
- Organize them in order of cost, with the least expensive on the top of your actual or metaphorical pile.
- Read through them first, comparing what they offer with your existing policy. Focus especially on coverage, exclusions and deductibles.
- Work your way down the pile, pulling out the ones that give you all you need at low prices.
- Check each company’s reputation with third-party sites like AM Best and J.D. Power.
- Call the insurers' call centers and run through the list of discounts on this page to see if you can get an even lower premium.
Taking a little time ensures the best policy at the best price.
FAQ: Auto insurance discounts
How much does car insurance cost?
The average car insurance cost for a full coverage policy in the United States is $1,682 per year or about $140 monthly. However, this amount can vary greatly depending on many factors, including the type of coverage you choose, your driving record, and the state in which you live.
How do discounts lower your car insurance rates?
Here are the three stages of calculating premiums and how a discount affects car insurance rates:
- Base rate. Your insurer determines your base rate based on your risk factors, the car you drive and where you live.
- Surcharges. Factors that could result in surcharges are considered, such as a ticket on your driving record, and may add a surcharge to your premium.
- Discounts. Discounts for which you qualify are then applied to the policy, reducing the rate by a certain percentage.
Base rate + surcharges - discounts = final premium.
How long do you have to be with an insurance company to get discounts?
Some discounts are applied automatically, while others can be earned only if you meet specific criteria. You can get a discount immediately, for instance, if you purchase a new car or complete a defensive driving course. Some insurers also offer loyalty discounts, which give customers a break on their rates.
How much is a good student auto insurance discount?
The discount amount varies by company, but it can be as much as 16% off your premium.
Which features of your car are worth a discount on your car insurance?
It depends on the company. Most offer a small discount for things like anti-lock brakes, passive restraints (seatbelts) and airbags. Anti-theft systems usually also reduce your rates.
Helpful auto insurance tools and calculators
