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Almost all states in the country have minimum insurance requirements that drivers must meet in order to legally drive, and that can come with a hefty price tag. Drivers across the nation pay an average of $545 per year for minimum coverage auto insurance, while the average cost of full coverage car insurance is $1,771 per year. How much each person pays can vary, however, as there are numerous personal factors, such as your driving record, claims history and ZIP code, that help determine your car insurance rates.
While the cost of a car insurance policy can be pricey, there may be ways to save money on your car insurance. One way that drivers may be able to get lower rates on coverage is by taking advantage of available car insurance discounts. All car insurance companies offer discounts, though the requirements, the type and number of available discounts, and the potential savings will vary from one company to the next. Understanding how to get car insurance discounts may help you get the best rates without sacrificing the coverage you need.
How can I get car insurance discounts?
Getting car insurance discounts is relatively simple. The majority of auto insurance providers have discounts for drivers who want to save money on their premiums. Not only can discounts help you save money, but some discounts can also help you reduce the likelihood of a claim.
Here are some of the common discounts that many car insurance companies offer.
If you are a licensed high school or college driver, you may qualify for special savings. Students can often get a lower car insurance premium for getting good grades in school or maintaining a minimum GPA. You can also find discounts for students who attend college a certain distance away from home and do not take their car with them.
Affiliation discounts are often provided for members of certain organizations, clubs and even employers. For example, if you are a member of a professional group or a fraternity or sorority, you might qualify for a discount depending on your insurance company. Some carriers also have special discounts for college alumni.
Good driver discounts
Good driver discounts are among the most popular discounts that car insurance companies offer. You may qualify for a claims-free discount if you have not filed a car insurance claim recently (typically between three and seven years) or have no accidents on your driving record. Many providers will also give you a discount if you drive safely and agree to allow them to track your driving habits using an app or device through a telematics program.
Bundling discounts are easy to take advantage of, especially if you have more than one insurance policy. Most insurance companies offer a bundling discount if you purchase two or more insurance policies from the same provider, like auto and home or auto and renters. Usually, you can also save money for insuring more than one vehicle on your auto policy with a multi-car discount.
Depending on how you choose to pay your car insurance premium, you may be able to get a lower rate. Many auto insurance carriers offer discounts for drivers who pay their premium upfront and in full rather than monthly installments. Additionally, you can often get an extra discount for enrolling in automatic payments and paperless policy statements.
Depending on the vehicle you drive, you could automatically qualify for certain discounts. For example, many insurance carriers will lower your rate if your car has safety features, like anti-lock brakes, an anti-theft device or a forward-collision warning system. You might also be able to save money if your vehicle is a newer model. However, you should keep in mind that sometimes car insurance premiums are already higher for new vehicles because they might be more expensive to repair or replace.
How do car insurance discounts work?
Every car insurance discount works differently. Each insurance provider offers unique discounts, and the savings potential will vary. Below are a few things to know about car insurance discounts:
- Discount amounts can be capped: If you qualify for a car insurance discount, chances are your provider will cap the amount of money you can save, either by dollar amount or percentage. For example, if you get a good student discount, you might only be able to save up to $500 on your premium, or get a maximum savings of 10 percent. Or, if you qualify for multiple discounts, the insurance company may limit your total potential savings amount.
- Not everyone gets the maximum savings: In some cases, discounts can help you get a lower rate, but you may not get the maximum discount. For instance, if your car has an anti-theft device but no other safety features, you might only receive a small portion of a safe vehicle discount.
- Discounts can vary based on various factors: Car insurance discounts can differ depending on your car insurance company, state, vehicle, and even your age. Make sure to ask about limitations and exclusions if you are looking for providers with good discounts.
- Discounts do not guarantee the lowest rate: Even if you are able to take advantage of multiple car insurance discounts, it does not mean that you are paying the lowest possible rate. By getting a few car insurance quotes from different companies, you can compare the same coverages to see which company offers the best rate and then use eligible discounts to further reduce the rate.
Other ways to save
Besides car insurance discounts, there are some additional ways that you can save money on your car insurance premium. Here are a few options:
- Raise your deductible: Your deductible is the out-of-pocket expense you have to pay toward a covered loss to your vehicle before your insurance coverage will kick in. Raising your deductible will lower your monthly rate, but make sure you can afford the higher out of pocket cost in the event of a loss.
- Improve your credit score: In most states, insurance companies will run a credit check when they calculate your premium. Drivers with a poor credit score may pay higher rates because they are viewed as more risky to insure.
- Purchase the right amount of coverage: Understanding how much car insurance coverage you need can be tricky. It might be a good idea to talk with your insurance agent to see what coverage options and limits are right for you — and to ensure you aren’t paying for more insurance than you need.
- Switch providers: Another way to save money on car insurance is to switch to a different provider. Some companies will give you a discount for simply being a new customer. Switching providers can also help you avoid a big rate hike if you recently had a claim, although you should be aware that it is highly recommended you do not switch carriers until all claims have been processed with your old carrier.
- Consider your mileage: If you work from home or just generally do not drive much, you could possibly save with a company that uses mileage as a factor to determine rates. Or, you could consider pay-per-mile insurance, which charges a base rate plus a mileage rate for every mile driven in a month.
Frequently asked questions
There is not one best car insurance company for every driver, as each driver has different wants and needs. For example, the type of coverage available and the cost of your coverage may be most important to you. Or, you may want to work with a company with excellent customer satisfaction scores and third-party rankings. To find the best car insurance company, it may be helpful to determine which factors matter to you the most. From there, you can compare quotes from the companies that meet your requirements to find out which offers the best rate.
The car insurance company with the cheapest rates depends on several factors, including your location, driving record, claims history and coverage needs. One of the best ways to find the cheapest rates is to shop around. By getting several quotes from different carriers offering coverage in your area, you can learn which offers the coverage you need at the lowest price so you don’t have to skimp on coverage to get premiums to fit your budget.
There are several ways to get a car insurance quote. Depending on the carrier, you can get a quote online, over the phone or in person. No matter which method you choose for getting a car insurance quote, be prepared to provide some personal information, such as your date of birth, drivers license number, your Social Security number and vehicle make and model.