Auto insurance is required in most states. That means that insurance companies don’t have to convince you that it’s a good idea to buy some – they way they do with, say, life insurance – so much as they have to sell you on the idea that you should be buying it from them instead of the competition.
One way they do this is with a time-tested, consumer-friendly tradition: discounts!
There are a lot of different car insurance discounts you can get from your insurer, but most insurance companies (and the DMV) categorize discount types into three main groups: driver discounts, vehicle discounts, and policy discounts.
One of the major factors in determining your car insurance rates is...well, you. There are some things, like your age, that you can’t do much about, but you can take advantage of some of your personal details to save big on your premiums.
Many car insurance companies will give discounts based on affiliations with certain groups, and this often takes the form of occupational discounts.
Active military members can often get car insurance at a reduced rate, as can many different types of federal employees. Some insurers also offer educator discounts.
Besides these broad groups, you can also look for more employer-specific discounts. GEICO, for example, has insurance discounts for employees of Berkshire Hathaway companies. You can also get discounts for being an alumnus of some schools (more on that in a minute), fraternities and sororities, or other groups.
Think you’re not eligible for a discount? There are discounts for members of USA Water Ski, so you never know. It’s always worth looking!
Student discounts are pretty popular, if only because it makes it more affordable for parents to buy a vehicle for their teen, saving them from endless nagging about how "all my friends have cars and everyone else gets to go off campus for lunch and it’s just not fair and I hate you and I can’t wait until I’m old enough to move out!"
You can’t put a price on that sort of peace of mind, but you can apparently put a discount on it.
The most common type of student discount is a good grade discount, which is pretty self-explanatory: if the student keeps his or her grades above a certain threshold, rates stay low. It’s good for their education and for their wallet, if parents are teaching them the hard lessons about money management early by making them pay for their own car insurance.
As mentioned above, there are also college alumni discounts. Esurance has a Pac 12 discount for graduates of schools from that conference.
Many insurers also offer discounts for college students while they’re actually still in college. It’s hard (or expensive) for a lot of students to bring their cars with them when they leave for college, but they’ll still need insurance for when they come back home. For those who won’t be using their car that often, they can get car insurance at a reduced rate so they’re still protected without paying full-time premiums.
And then there are discounts for how a driver drives.
Good driver discounts are based on the number of claims filed, how many times you get ticketed, and so on. If you’ve ever had a fender bender, you know that it can raise your rates by quite a bit. But if you can go three to five years without any incidents, you might be able to see a drop in your premiums.
You can also get discounts for being an educated driver. Driver’s ed courses can often get you a discount, but those are most commonly associated with new drivers. If you’re still looking to lower your rates, defensive driving courses can help you achieve the same results.
Finally, look for low-mileage discounts. The less you drive, the less likely you are to be in an accident, so many insurers will give you a break if your annual mileage is low enough.
Once you’ve got your driver discount covered, it’s time to focus on your better half: your car.
Vehicle discounts most often come in the form of rewarding safety. Newer vehicles – not as in "your brand new car," but rather "your car that is newer than 25 years old so it has modern safety features" – can make your insurance premiums cheaper. These vehicles have a lot of the features that can save your life and your bank account: automatic seatbelts, anti-lock brakes, and airbags. Some insurers will give you a discount if your car has those safety features even if it is on the older side.
Anti-theft systems can also be factored into discounts. Depending on the insurer this will range from simple car alarms to recovery systems like LoJack or OnStar. If you’re looking for this discount, make sure your vehicle’s anti-theft system qualifies first.
You can also be rewarded for helping save the world. Hybrid car or vehicles that use alternative fuel sources are eligible for discounts at some insurers. Find out if food grease fuel qualifies you for a discount; you can save some money and smell delicious at the same time.
So when you’re shopping for a car insurance policy you can get discounts for yourself and discounts for your vehicle, but you really start going down the Inception rabbit hole when you start getting policy discounts about your policy.
A lot of policy discounts are used for customer retention. Insurers want to give you every reason to stay with them and make it worth your money to do as much business with them as possible.
That’s why you get things like bundling and multi-policy discounts. Most car insurers aren’t just car insurers; they offer many more insurance products, and they want you to buy those, too. So when you get your car insurance through a certain insurer, chances are you’ll get a discount if you also get home insurance, life insurance, renters insurance, or another type of insurance through them as well. It’s worth getting a financial checkup to see what your insurance needs are, and if you need more coverage, see if you can get it all in one place. (And if you’re thinking about buying life insurance as part of a bundle, get some free comparison quotes from our quoting tool first to make sure you’re getting a better deal with a bundle. You don’t want to wipe out any savings you were trying to achieve!)
Family plans are also common. If you, your spouse, and your kids are all insured with the same company, you’ll probably get a discount. Plus, having all of your plans at one company makes it easy to avoid the hassle of multiple premium payments to multiple companies at different times.
How you pay can also save you money. Some insurers will offer a discount for going paperless with your billing, and paying your annual premium in full all at once as opposed to monthly can save you money. Obviously you should only do that if you have the cash to spare – sometimes you don’t have a choice but to spread payments out – but if you do, it can save you in the long run.
The most obvious time to focus on customer retention is when a customer has to renew their policy, which is why most insurers offer some sort of renewal discount to keep you from switching to a different insurer.
And, of course, there are discounts to make sure you do switch to a different insurer! Transfer or switch discounts are just that: join up with an insurer and they’ll give you a discount for ditching the competition. This makes it worth shopping around when it comes time to renew your car insurance – just in case you can find a better deal elsewhere.
There’s a lot of flexibility when it comes to your auto insurance, and which car insurance discounts you’re eligible for can play a big role in which carrier you go with and how much you’ll pay every year. It’s important to do your research to see which company can get you the best deal.
It’ll pay off in the long run.