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Ultimate Guide to Auto Insurance Discounts
Insurance companies use clever marketing strategies to entice consumers to buy their products. You have likely seen television commercials or heard radio ads featuring a dapper, green lizard with a British accent, a pink pig that squeals “Wheeeee!” or the carrier that once claimed saving money with their company was “so easy a caveman could do it.” The commercials are no doubt catchy but just how easy is it to lower your insurance rates?
We’ve compiled a comprehensive guide to discovering both common and hidden discounts available to you save money on your auto insurance. We’ll let YOU be the judge.
Many available discounts are built into the insurance quote or application itself. Key pieces of information are used to determine your rating factor, or the amount of risk you pose to the insurance company. Most realize a clean driving record or a low claims history would be obvious reasons for a lower rate, but did you know your marital status is also considered? Let’s look at the most common rating factors that influence auto insurance rates.
- Age and gender– Studies in human development have shown repeatedly that girls tend to mentally mature more quickly than boys, equipping them with better decision-making skills at a younger age. Studies also show that young men tend to take greater and more frequent risks than their female counterparts. Coupled with lack of experience behind the wheel, it is no surprise that young males typically pay higher rates than young females. On average, these rates for both genders tend to decline after the age of 25. On the flip side of that coin, senior citizens often enjoy a discount once they reach the golden years because they drive less.
- Address/Garaging Location– Where you live can impact your rates. Someone who lives in LA will likely see higher rates than someone who lives in a rural town with one stop light. Additionally, whether you park your car on the street or in a garage can impact rates.
- Credit Score– This is a surprising rating factor to many. After all, what could a 560-credit score have to do with one’s ability to operate a vehicle safely? Because rates and discounts are based on risk, insurance companies look at this number in terms of ability to pay bills on time. Billing, re-billing and policy cancellations/reinstatements cost a company time and money. Therefore, most companies reward those with high credit scores with lower rates with the anticipation that these policyholders will cause them to incur fewer expenses.
- Marital Status– Research shows that those who are married or living with a significant other tend to pose less risk. It could be argued that this is in part to sharing financial responsibilities with another, while other research suggests that those who cohabitate have “settled down” and are more stable than those who are single. Widows/widowers also experience lower rates then that of a single person.
- Education/Profession– Statistics show that those with higher levels of education, tend to drive more carefully and get into fewer accidents. This is why it’s important to share the highest level of your education on your insurance application.
- Military/Veteran Status– Many companies offer discounts to those who serve our country. Some companies offer a policy level discount (meaning the discount is applied to the entire policy) while others apply the discount only for the military member themselves. Additionally, some companies may limit this discount to those who are active duty or those who have been discharged for a certain amount of time.
- Longevity– Most companies reward their policy holders for time they have been with their company (usually 3 years). Some also offer an additional discount for maintaining continuous coverage (with no lapse) with any carrier. When obtaining new quotes, it is helpful to know your policy inception and expiration dates to claim this discount.
- Annual Mileage/Vehicle Use– Like garaging location, many companies look that the number of miles you put on your vehicle annually. A vehicle primarily used for work/commute is likely to rack up a few more miles than a vehicle that is driven strictly for leisure. Ultimately the number of miles driven annually, correlates back to the likelihood of being involved in an accident.
- Good Driver/Defensive Driver/Driver Training– Companies obviously reward drivers for clean driving records, but did you know that taking a defensive driving course or taking a new driver training course can also lower your rates? Be sure to have copies of completion certificates to request this discount. Many safety courses have expiration dates and must be re-taken to keep this discount.
- Student Discounts– Students who maintain a GPA of 3.0 or higher often qualify for a sizable discount. Additionally, students who are attending college who are regular drivers on a policy, but leave their vehicle at home, also qualify for a discount (i.e. Less driving=less risk).
- Multi-car/Multi-policy Discounts– Companies tend to offer a break to those who insure more than one vehicle and some companies offer an additional discount for insuring more than 5 vehicles on a single policy, sometimes referred to as a fleet discount. Additionally, companies reward customers for insuring other lines of business with them such as homes, watercraft, valuable personal property, etc.
- Safe Vehicle Discount– Vehicles equipped with air bags, automatic seat belts, passive restraint and anti-theft technologies also qualify for discounts.
Some less obvious discounts are offered by carriers and are becoming increasingly popular to entice new customers.
- Advanced quoting or online quoting discounts may be available for those who are planning to switch carriers in advance.
- Club Memberships/Professional affiliations may entitle you to a discount such as AAA, AARP, Union memberships, etc.
- Paperless discounts are becoming more and more popular with carriers for those who wish to receive billing statements and policy documentation digitally via email or a cell phone app.
- Payment option discounts are also becoming popular. Those who pay their premium for an entire policy period or who agree to make monthly electronic fund transfers can receive substantial discounts.
- Driver monitoring devices from several companies have been developed to examine driving habits of their customers in exchange for a healthy discount. You may be asked to install a device in your vehicle or download an app on your phone that is then linked to a navigation system that transfers information about your driving habits back to the company.
- Hybrid/Electric Vehicle discounts are also beginning to become more popular among carriers who are environmentally conservative.
- Accident forgiveness/Vanishing deductibles are another increasingly popular rate reduction strategy some insurance companies are adopting. Companies reward their drivers by opting not to surcharge a driver for an accident if they have a good driving record and fall victim to an unfortunate accident OR they lower the physical damage deductible for every year a driver remains accident-free. While this is not technically a discount, it ranks as a highly sought-after incentive for those who are “good drivers”.
Whether a multi-million-dollar advertising campaign featuring a gentleman in khakis who never leaves his phone or a need to cinch up the proverbial purse strings has prompted you to shop for new auto insurance, we hope that our guide to auto insurance discounts provides you with new-found knowledge to enable you to take advantage of some discounts you may have been missing out on. While no two insurance companies are the same, being educated about the options available to you is always our goal!