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An Ultimate Guide to Car Insurance Discounts

Auto insurance discounts can have a significant affect on your final premium. What are the popular discounts and how you can get many of them?
Author: Lorraine Smithills
Lorraine Smithills

Writer, Contributor

Experience

Lorraine is a financial writer with expertise in the banking sector. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.

Review & Fact Check: Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Financial Expert, The Smart Investor CEO

Experience

Baruch Mann (Silvermann) is a financial expert and founder of The Smart Investor. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.
Author: Lorraine Smithills
Lorraine Smithills

Writer, Contributor

Experience

Lorraine is a financial writer with expertise in the banking sector. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.

Review & Fact Check: Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Financial Expert, The Smart Investor CEO

Experience

Baruch Mann (Silvermann) is a financial expert and founder of The Smart Investor. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.

We earn a commission from our partner links on this page. It doesn't affect the integrity of our unbiased, independent editorial staff. Transparency is a core value for us, read our advertiser disclosure and how we make money.

Table of Content

Insurers assess all aspects of car insurance in terms of statistics. When you apply for car insurance, the insurer will use the information you provide to determine the likelihood that you will be involved in an accident. While this can work against you if you have risk factors in your profile, it can also benefit you in the form of car insurance discounts.

If you belong to a group that has less likelihood of being involved in an accident, insurers will often offer a discount on your premiums. There are various car insurance discounts available which we will explore in more detail in this article.

How Much Can Discounts Lower Your Policy?

This follows on from the previous point, but the available discounts will vary according to car insurance statistics. The specific discount does depend on the insurer, but generally speaking, the less chances of being involved in an accident for a particular characteristic, the greater the discount.

Individual discounts can reduce your premiums by as much as 30%, but it is possible to combine discounts. This means that you can dramatically reduce your policy costs if you qualify for multiple discounts.

The Significant Impact of Auto Insurance Discounts

As we have discussed above, discounts can dramatically impact the cost of your car insurance. Therefore, it is crucial that you consider all available discounts when you make car insurance comparisons. For example, while one insurer may offer a seemingly higher quote when you factor in higher discount rates offered by that firm, it could end up being a far better value.

Many insurers will automatically apply discounts during the quotation process, but it is always worthwhile checking if all your available discounts have been applied. Browse through the list of discounts offered by that insurer and check they are included in your quote. This will allow you to make an informed decision when you’re making your car insurance comparisons.

The Most Popular Discounts to Consider

While the specific discounts can vary from insurer to insurer, there are some popular ones which are offered with most firms. These include:

  • Bundling: This is one of the easiest ways to save on your car insurance. Insurers will often give you a discount if you hold multiple insurance policies with them. For example, you could bundle your home and auto insurance. Insurers will often give a discount for each policy you bundle together. This means you could save as much as 25% on your car insurance.
  • Multi Car: Whether you drive different vehicles or they are simply in the same household as you, you can save up to 25% on your coverage with a multi-car policy. This is a little like bundling, but it applies specifically to car insurance policies.
  • Payment In Full: Managing payments requires administration, which increases the insurer's costs. There is also the potential for further costs if the insurer needs to chase late or missed payments. This means that many insurers will offer a discount of up to 10% if you pay for your entire car insurance policy in full.
  • Low Mileage: Statistically speaking, the longer you are on road, the greater the chances of being involved in an accident. So, if you typically have higher mileage, you are more likely to file a car insurance claim after an accident. Fortunately, the reverse is true and it is quite common for insurers to offer a low mileage discount. If you tend to drive less than the annual average, you could save up to 20%.
  • Telematics: This is a fairly new discount and it involves allowing the insurer to monitor your driving habits for a set period using an app. Most insurers offering this type of scheme will apply a discount just for signing up, but after the testing period, you can also receive a discount if you have demonstrated safe driving habits and practices.
  • Vehicle Safety Features: If your vehicle is equipped with safety or anti theft devices, there is less chance that you will file a claim, so this is often reflected in your insurance costs. Insurers will typically ask if your vehicle has anti lock brakes, an alarm system or other anti theft devices when you apply for a quote, so be sure to check your vehicle information carefully before you tick yes or no.
  • Loyalty: Marketing and advertising for new customers is extremely costly. So, many insurers will reward you for sticking with them in the form of a loyalty or continuous coverage discount. It is important to factor in any potential loyalty discount when you’re comparing quotes.

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Best Discounts for First Time Drivers and Students

New and young drivers can often pay the highest car insurance premiums, so it is appropriate that there are also some discounts available to this group. Some of the best discounts for students and first time drivers include:

  • Good Student: This typically applies to the under 25s who are still in full time education. You will need to provide proof of your academic records to the insurer, but if you maintain a B average, you could save as much as 25% on your car insurance.
  • Away From Home Student: This is a great discount if your child leaves their car at home and they go to college over 100 miles away. You can save up to 25% with this type of student car insurance discount.
  • Academic Organization: This is a good option for graduates, as you can get a discount on your car insurance for belonging to a university alumni group or professional organization. Many insurers have a long list of partners and you could earn as much as a 10% discount.
  • Defensive Driving: This discount applies to any age group, but it is particularly important for young people. Since young people have the highest risk of being involved in an accident or getting traffic violations, taking a certified defensive driving course could net you a discount of up to 15%. Just be sure to check which courses are approved for specific insurers.

Best Discounts for Experienced Drivers

While experienced drivers tend to have the best insurance rates, this doesn’t mean you can’t access some great discounts. Some of the best include:

  • Military: If you’re active service personnel or a veteran, there are many car insurers who honor this contribution. You can earn up to 15% discount and this often extends to your immediate family members. However, this is usually limited to two generations of family and in some cases, they must reside at the same address.
  • Senior: If you’re over the age of 55, you could qualify for a mature or senior discount. This is because statistically, the over 55s are in the lowest risk group. You could earn up to a 10% discount from many insurers.
  • Professional or Employee: There are many insurers that have affiliations with organizations to offer employees or members additional discounts. For example, Geico has a list of over 500 partners where members can earn a 3% discount. However, it is possible to earn up to 10% discount.
  • Homeowner: Homeowners are considered more stable, which can be reflected in their driving practices. For this reason, some insurers will offer a discount of up to 3% if you own your home. The great thing is that you don’t even need to have homeowners insurance with your car insurer to qualify for this type of discount.

How to Find the Best Car Insurance Discounts?

Now, you’re aware of some of the best car insurance discounts, you may be left wondering how you find them. Fortunately, we have some tips to help you.

  • Be Aware of Your Driving Profile: The first thing you can do to find the best car insurance discounts is to become familiar with your own driving profile. Check out your existing policy documents to see the layout and categories. It is also worth checking what discounts you currently receive.
  • Look at Discount Categories: It can be daunting to check a long list of car insurance discounts, so look at them in terms of categories. This will help you to immediately discard any discounts that do not apply to you. You can then spend more time studying the discounts that do apply to you.
  • Look for Partnership Discounts: One of the easiest ways to find a discount is via a partnership. So, if you belong to a professional organization or you’re a military vet, focus your car insurance search on companies that offer you a discount.
  • Search for Telematics Discounts: More and more insurers are offering telematics programs and these can be a great way to qualify for multiple discounts. Once your driving habits and patterns are assessed, you can obtain a discount for safe driving, low mileage and others, in addition to a discount for signing up.

Surprising Auto Insurance Discounts to Know

There are also a number of hidden or surprising auto insurance discounts that you may qualify for without even realizing it. These include:

  • Auto Payment: As we touched on above, chasing payments requires a great deal of admin. So, when you sign up for auto payment, many insurers will offer you a discount on your policy. This is also more convenient for you and you won’t risk any late payment fees on your account.
  • Paperless or Online Billing: This is another area where the insurer can save on its admin costs. By signing up for online or paperless billing, the insurer won’t need to print and send out a bill each month. These savings are passed on to you in the form of a discount.
  • Green Car: This is becoming more commonplace, as insurers reward their customers for greener driving habits. Whether you have a hybrid or electric vehicle, you can qualify for a discounted rate on your insurance costs.
  • Passive Restraint: Passive restraint equipment can refer to numerous pieces of auto technology, but even basics such as airbags can allow you to qualify for a discount. Be sure to pay close attention to the questionnaire when you’re applying for a quote and you may automatically qualify.
  • Daytime Running Lights: If your vehicle is equipped with daytime running lights, you could get an immediate discount on your car insurance coverage. Daytime running lights are thought to reduce the likelihood of being involved in a collision and there are a number of insurers that provide this type of discount.
  • Early Signing: If you’re organized and get your renewal or new insurance cover arranged early, you could get up to 10% off your policy costs. This is a great incentive for getting everything in place early and you don’t risk getting stung with a hefty auto renewal premium.

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Which Company Offers The Best Discounts?

The available discounts can vary greatly between insurers, but how do the leading insurers compare? Here we’ll examine the top discounts with Allstate, Geico, Progressive and State Farm.

1. Allstate 

Allstate offers a number of discounts, but some of the best include:

  • Safe Driver: Allstate operates a Safe Driver Club and if you’re enrolled, you can get a bonus for every six months where you don’t have an accident. This applies automatically and you can choose whether you want to apply your bonus to your car insurance or receive a check.
  • Military: Allstate does not specify a particular percentage of how much discount you can receive for being active military service personnel or a veteran. However, Allstate does promote that it is supportive of our armed forces, which means that you could benefit from a great discount.
  • eSmart: This is an easy way to save up to 10% on your car insurance. All you need to do is sign up for an ePolicy or paperless account. It will mean that you need to store your documentation digitally or print it out yourself, but this is more than offset by the nice discount.
  • Student: Allstate has several student discount options, but one of the best is its Good Student discount. You can earn up to 20% discount on your coverage if you maintain a B- average or 2.7+ GPA or successfully complete a teenSmart driver education program.

2. Geico

Geico is well known for its comprehensive list of car insurance discounts. The highlights include:

  • Car Rental: While this doesn’t reduce your auto insurance costs, it is a very nice incentive for becoming a Geico customer. Geico policyholders can enjoy a discount on car rentals from popular agencies of up to 50%. The specific amount depends on the rental details and agency.
  • Student: Geico is another great option for students. You’ll need to maintain a B average or 3.0+ GPA and be in full-time education. This is only open to the under 25s, but you can save up to 15% on your auto insurance.
  • Defensive Driving: If you complete a defensive driving course, you can qualify for a discount on your Geico car insurance. The specific discount depends on the course and your home state, but Geico has a full list by the state on its official website.
  • Good Driver: If you have a driving history of five years plus with no accidents, you can save up to 22% with the Geico Good Driver discount. This applies to most coverage options and you may even qualify for accident forgiveness to maintain your good driving record.

3. Progressive

The best Progressive car insurance discounts are:

  • Perkshare: Like Geico, Progressive offers discounts and savings beyond your car insurance premiums. Perkshare is a collection of free perks just for being a Progressive customer. These include savings on vehicle rentals, vehicle history checks, car maintenance, and recreational activities.
  • Good Student: if you are a full-time student and maintain a B average or better, you can qualify for a good student discount. Progressive customers enjoy an average saving of 10% with this discount.
  • Snapshot: The Progressive Snapshot program offers a personalized rate based on your actual driving. The safer your driving habits, the greater the potential savings. You’ll need to sign up for the Snapshot Road Test, but customers enjoy an average saving of $146.
  • Multi Policy: If you have two or more Progressive policies, you can enjoy a discount on your coverage. If you have auto and home insurance, you’ll get a discount on both. While the specific discount can vary, there are average savings of 5% with this discount.

4. State Farm

The State Farm discounts can vary from State to State, but generally the best discounts are:

  • Good Driver: This discount is available as soon as you become a State Farm customer. It is available if you have had no traffic violations or adverse entries on your driving record for at least three years.
  • Good Student: If you’re under 25 and in full-time education, you can qualify for this good student discount with a B average or 3.0 GPA. You will need to provide report cards or college grade statements to maintain your discount.
  • Multi Car: If you have more than one vehicle in your household and insure all of them with State Farm, you could save as much as 20% on your total auto insurance costs.
  • Drive Safe and Save: You can sign up using OnStar or by downloading the Drive Safe and Save smartphone app. This will track your driving habits and behaviors to help you save money on your car insurance. If you demonstrate safe driving habits, your rate will be adjusted accordingly.

Why Do Insurance Companies Provide Discounts?

Finding and keeping customers can be a costly process. When you think about the costs of mailers, media ads, and other promotions, it is easy to imagine the skyrocketing expenses involved. Insurance companies provide discounts to retain you as a customer and keep their prices competitive.

However, discounts have another purpose; they incentivize good habits and behaviors. As we mentioned earlier, insurance quotes are calculated based on statistics and probabilities. So, by offering discounts for characteristics that reduce the likelihood of being involved in an accident, they keep drivers aware of the potential dangers on the road.

FAQ

There are a number of insurance companies that offer car insurance discounts for teachers. This is usually due to a partnership with trade and professional organizations. There are also insurers that specialize in offering great rates for teachers.

So, if you are in this industry, make sure you specify this when you’re getting auto insurance quotes.

There are a number of insurers who offer discounts for federal employees. This is similar to the military discounts we discussed above, but if you are a federal employee, you may be able to qualify for a discount to thank you for your service.

Many people feel a little intimidated to ask for discounts, but most insurers promote their discount schemes. So, if you have checked the list of available discounts and think you qualify, simply ask the representative if it has been included in your quote.

This is often referred to as accident forgiveness, but essentially it means that you won’t lose your good driving discount if you’re involved in an accident. With this feature, if you are involved in an accident, you won’t have to restart the count on your driving record.

In theory, your car insurance should get cheaper, but there are a number of factors that are considered at renewal time. Firstly, even if your vehicle and address has not changed, the insurance company will consider inflation and the market costs of insurance.

If these have gone up, your insurance will also go up. Your insurance quote will also consider any recent additions to your driving record. So, if you’ve had a claim or traffic violation, your premiums will actually increase.

Loading is an additional cost designed to cover the losses that are higher than anticipated. This is built into your policy to ensure that the insurance company is not out of pocket when insuring a person prone to risk.

So, if you have a track record of speeding or have accidents on your driving record, a loading cost may be included in your premium.

This depends on the insurer as not all companies offer military personnel and veterans a discount. However, there are a great many that do. In some cases, the discount is extended to family members.

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Methodology

Our expert review team gathers data from many auto insurance providers in order to create rankings and estimate rates. 

Financial Stability: We analyzed each company based on industry benchmark ratings (summary table can be seen under “customer satisfaction” section) . Although insurance marketplaces do not have financial strength ratings they can still be useful tools for drivers who are looking for premiums at competitive rates. If you are looking for an insurer that doesn’t underwrite your policies, be sure to check the rating of the partner company. 

Coverage: Which types of insurance are available, their maximum coverage limits and any add-on policies. We also consider exclusions that are applicable to certain drivers.

Cost and Discounts: We review auto insurance rates estimates for many drivers across every state. The best scores are awarded to companies that offer lower rates and have many discount options for car insurance. You can lower your insurance premium by qualifying for any driver discounts. 

The discount percentages offered vary depending on where you live and some companies restrict the amount of discounts that can be applied to your premium. We looked at the discounts offered in the various companies that we reviewed. Many allow you to combine different insurance policies to save on premiums. There are many savings options for drivers shopping for car insurance. These include discounts based on the type of car, profession, driving record, and other factors. Companies that offer a variety of options could lead to a lower premium for drivers were favored by us.

Customer Service: We review customer feedback and reviews from J.D. Power. Data such as market share, complaints to the National Association of Insurance Commissioners for private passenger car insurance (2021) and overall ratio of those complaints to the industry average. 

In order to provide accurate and neutral information to our readers, our expert review team collects data from dozens of car insurance providers. Vehicles used include the 2017 Hyundai Sonata, 2017 Toyota Corolla, with annual mileage ranging from 10,000 and 20,000. We analyzed five credit tiers (excellent, good, very good, fair, and poor) and four types of people in different age groups. Lastly, we divided drivers to 4 categories based on safety history: Clean driving records, one at fault accident, one speeding violation, and one DUI.

We took into account parameters such as companies mobile apps, advanced online services, and telematics make it easier for auto insurers to respond to consumer needs. Many providers offer support via phone, email and agents. Some even offer live chat and 24/7 support via phone, email, or mobile app, while some provide social media responsiveness during weekends and after-hours hours.