How do discounts apply to a car insurance policy?
Car insurance discounts are percentage-based reductions that typically apply to specific parts of your premium rather than your bill as a whole. How much you save depends on both the discount percentage and the cost of the coverage it applies to.
A discount that applies to multiple coverage areas can significantly lower your total premium, even at a modest percentage. A discount that applies to only one coverage may offer smaller, although still worthwhile, savings.
Insurance.com broke down data on common car insurance discounts as they apply to the various components of a car insurance policy to see how the savings really add up. The components are:
- Bodily injury (BI)
- Collision
- Comprehensive
- Medical payments
- Property damage (PD)
- Personal injury protection (PIP)
- Uninsured motorist bodily injury (UMBI)
- Underinsured motorist bodily injury (UIMBI)
- Uninsured motorist property damage (UMPD)
- Underinsured motorist property damage (UIMPD).
Why do discounts affect different parts of your premium?
Your auto insurance policy includes different coverages priced differently, and discounts can apply more heavily to some coverages because that’s where the reduction of risk is statistically relevant. A few discounts are applied to your entire premium, not just individual coverages.
For example, a safety-device discount reduces medical coverage by 18%, but medical coverage averages just $22 a year. That's about $4 in savings. That same discount reduces your collision premium by 5%, but because the average cost of collision coverage is higher, at $1,075 a year, the savings are more significant, about $52 a year.
An anti-theft device discount only applies to a policy with full coverage, since it has no impact on your potential liability in an at-fault accident. Overall, the savings are 2%, or about $45 a year, but the majority of that savings, $32 a year, is applied to your comprehensive premium. That’s because comprehensive is what will pay if your car is stolen.
Each insurance company uses its own formula to determine premiums based on coverage and driver profile, and each offers different discounts and savings amounts. Compare quotes from multiple companies to find the best available rates and discounts.
Discounts ranked by potential savings
The discounts with the highest percentage savings are student away at school (13%), profession (12%), and loyalty (11%). Paperless documents (3%) and electronic payments (4%) offer the lowest savings percentages.
| Discount | Average % savings | Reduction of overall premium | Premium after discount |
|---|---|---|---|
| Student Away At School | 13% | $56 | $253 |
| Profession | 12% | $39 | $262 |
| Loyalty | 11% | $43 | $259 |
| Air Bags | 9% | $20 | $284 |
| Anti-Theft Device | 9% | $22 | $293 |
| Education | 8% | $31 | $273 |
| Multi Policy | 8% | $30 | $270 |
| Days Advanced Purchase | 7% | $25 | $275 |
| Electronic Signature | 7% | $27 | $273 |
| Homeowner | 7% | $22 | $277 |
| Telematics | 7% | $31 | $298 |
| Safety Devices | 6% | $18 | $285 |
| Electronic Funds Transfer | 4% | $15 | $286 |
| Paperless/Electronic Documents | 3% | $10 | $289 |
Which coverage types do discounts apply to?
We looked at 10 coverage components, including bodily injury and property damage liability, collision, comprehensive, medical payments, PIP, and four uninsured/underinsured motorist coverages.
Most listed discounts apply to many coverages, but the anti-theft device discount applies only to two: collision and comprehensive. Additionally, seven of the listed coverages offer 14 or more discounts, but UIMPD offers none.
| Coverage | Baseline premium | Range of savings |
|---|---|---|
| BI | $508 | 2% - 19% |
| Collision | $1,075 | 1% - 18% |
| Comprehensive | $464 | 1% - 14% |
| Medical | $22 | 5% - 23% |
| PD | $296 | 1% - 16% |
| PIP | $275 | 3% - 20% |
| UIMBI | $117 | 2% - 13% |
| UIMPD | $13 | 0% |
| UMBI | $176 | 1% - 13% |
| UMPD | $27 | 4% - 15% |
How much can you save by coverage type?
You’ll generally save the most on liability and collision coverage. That’s because those are the most expensive coverages on your policy, so a percentage savings on those coverages is higher than that same savings on a less expensive coverage, such as UIMPD.
For example, the largest discount for a student away at school saves 20% on liability coverage, for an average savings of $96. The discount on the collision portion of the coverage is smaller, at 18%, but saves an average of $182, since collision is more expensive. Medical payments coverageAn auto insurance coverage that provides coverage for medical expenses incurred by you and your passengers in the event of an accident, regardless of who is at fault. has a 13% discount, but the savings are only $3 because it’s an inexpensive coverage.
Both full coverage and liability-only policies offer an overall 16% discount for a student away from home, but the total savings differ: $133 a year on the liability-only policy and $417 a year on the full coverage policy. Full coverage policies include more costly coverages, so the same percentage means bigger savings.
| Coverage | Average cost of coverage | Reduction of overall premium | Premium after discount | Average % savings |
|---|---|---|---|---|
| BI Premium | $490 | $16 | $474 | 3% |
| Coll Premium | $1,018 | $44 | $974 | 4% |
| Comp Premium | $451 | $1 | $450 | |
| Full coverage | $2,578 | $114 | $2,464 | 4% |
| Liability only | $829 | $51 | $778 | 6% |
| Med Premium | $22 | $5 | $17 | 24% |
| PD Premium | $289 | $9 | $280 | 3% |
| PIP Premium | $264 | $54 | $210 | 21% |
| UMBI Premium | $181 | $2 | $179 | 1% |
Why do savings differ by coverage type?
Savings differ by coverage type because different discounts reflect different reductions in risk. A discount that reduces the risk of theft will impact comprehensive coverage, while one that reduces the risk of injury will impact medical coverage.
Some discounts affect every aspect of your coverage because they reduce the overall risk of a claim, or because they are provided for choices you make to reduce the company’s overhead, such as with a paperless billing discount.
Spotlight: The same discount, different impact by coverage
One discount can yield different amounts of savings across coverages. An airbag discount shows why the percentage alone doesn't tell you how much you'll save. In our data, the discount cuts medical coverage by 23%, but that amounts to only $5 because medical coverage is relatively inexpensive. The same discount reduces collision coverage by just 4%, but saves $47.
“An airbag typically has no impact on a collision payout, aside from the added repair cost, which would be negligible compared to the medical or uninsured/underinsured bodily injury claim payouts,” said Zack Pope with David Pope Insurance. “So, discounts apply to coverages that have a statistical impact from that specific item.”
| Coverage | Average % savings | Reduction of overall premium |
|---|---|---|
| Medical | 23% | $5 |
| PIP | 20% | $56 |
| Collision | 4% | $47 |
| BI | 3% | $17 |
| PD | 3% | $9 |
| UMBI | 1% | $2 |
| Comprehensive | <1% | $1 |
| UIMBI | No change | No change |
| UIMPD | No change | No change |
| UMPD | No change | No change |
Can you stack discounts?
You can often combine multiple car insurance discounts, but they don't necessarily apply to the same coverages. Because discounts apply at the coverage level, two stacked discounts may overlap heavily on collision but barely touch medical payments — the combined effect isn't uniform across your policy.
Scenario 1: Driver with a single policy and a narrow discount. A driver with a $2,578 full-coverage premium could receive a 9% anti-theft discount. Because the discount applies only to collision and comprehensive coverage, the overall premium reduction is $45.
Scenario 2: Long-term, multi-policy customer with a student away at college. A driver with multiple discounts like student away at school (13%, $56), loyalty (11%, $43), and multi-policy (8%, $30) can save significantly more.
How to maximize your discounts
To maximize your discounts, first find out what you’re eligible for, find out what you need to do to get those discounts and reassess annually.
- Review your eligibility. Check which discounts you currently qualify for.
- Explore options. Some discounts require action, such as enrolling in telematics, bundling, selecting paperless, and purchasing your policy in advance.
- Ask about bundling. Confirm which discounts can be combined, and which coverage components each one touches.
- Reassess annually. Circumstances change, and new discounts may become available each year.
Factors that affect your actual discounts
The discount percentage you see advertised isn't necessarily the amount you'll receive. Your actual savings can vary by insurer, driver, vehicle, and coverage.
Each insurer sets rates, discount amounts, and how those discounts apply. For example, a driver enrolled in a telematics program can earn a discount up to a designated percentage, but their driving habits determine how much of that discount they receive. They don’t automatically receive the entire percentage.
The actual discount amount can be impacted by:
- The insurer
- Where you live
- How long you’ve been with the carrier (for loyalty discounts)
- The type of vehicle you drive
- The coverage you choose to carry
Saving with car insurance discounts
Most car insurance discounts apply to specific coverages rather than your entire premium. That means a discount's percentage doesn't tell you exactly how much you'll save.
To make the most of auto insurance discounts:
- Review your current policy for discounts you might be missing, especially the personal-characteristic discounts.
- Get quotes from multiple insurers to compare discount offerings.
- Ask your insurer specifically how each discount applies across your coverage components, not just your total premium.
- Consider taking actions that qualify for discounts, such as bundling, telematics enrollment, paperless selection, and purchasing in advance.
- Reassess your discounts annually as your circumstances change.
FAQ: Car insurance discounts by coverage
Do all discounts apply to all parts of my premium?
No, most discounts apply to specific coverages in your policy, such as collision or comprehensive. Some discounts, like paperless billing, apply to your entire policy.
Can I combine multiple discounts?
Yes, you can combine eligible discounts to save the most. Insurers decide how discounts apply and whether there is a limit to how much you can save.
If I qualify for multiple discounts, how much can I save in total?
The amount you can save from discounts depends on your insurer, coverage, and driver and vehicle characteristics.
What's the biggest discount available?
According to our data, the student away at school discount offers the biggest overall savings percentage at 13%, though it can reduce specific coverages like liability by up to 20%
Does bundling insurance policies save me money?
Yes. Bundling insurance policies saves money, but it is not always cheaper than having individual policies through multiple insurers. Compare quotes for both bundled and combined to make sure you’re getting the best deal.
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