Car Insurance Discounts

Driver safety, driver status, policy, vehicle, and usage-based discounts are the five types of auto insurance discounts. We explain which ones are applied automatically when you get a quote and which ones require driver initiative, and we show you how to get these discounts and save money on your car insurance.

Driver safety car insurance discounts

These types of car insurance discounts recognize and reward safe driving habits. These are the most common discounts offered by insurers, and they account for a sizable portion of consumers' savings on car insurance rates.

Defensive driving discount (10% to 15%)

Drivers who take defensive driving classes from a certified or registered school are eligible for a 10% to 15% discount on their liability, collision, and personal injury or medical payments coverages. To avoid accidents, classes teach drivers how to better assess road, traffic, and weather conditions.

Some companies will automatically ask if you've taken defensive driving classes when quoting your rate, but you can get the discount even if you're in the middle of your policy. Finally, before you sign up for the lesson, check with your insurer to see if you have to be a senior citizen to qualify for these discounts.

The table below shows how much classes at two national schools can cost, as well as the size of the discount (using Geico as an example). Savings are calculated using the National Association of Insurance Commissioners' average insurance expenditure (NAIC).

Accident-free and good-driver discounts

Companies such as Allstate, Geico, State Farm, and the majority of others offer good-driver discounts if you have not had an accident in the last three to five years. This discount is usually applied automatically. If you do not qualify at the time of signup, you may be able to adjust your premium at the time of your next renewal if you have been accident-free for the required time. The definition of a "good driver" may differ slightly between companies, so check with your agent for more information.

Safe driver discount (10%)

Safe driver discounts are given to motorists who practice conservative driving habits such as having all passengers wear seat belts, driving at a slow speed, braking less aggressively, and so on. For these good driving habits, insurers have been known to reduce liability and collision auto insurance premiums by 10% or more.

Many insurers combine safe and good-driver discounts, with the exception of Geico and Allstate, which distinguish between the two and offer them separately. Companies such as Progressive and Allstate typically monitor safe driving through their Snapshot and Drivewise programs, which we discuss in greater detail below.

Savings for low mileage and usage (varies, up to 20%)

If you don't drive often, you may be eligible for a low mileage usage discount. Insurers will ask you about your average annual mileage whenever you get a quote. The average person drives approximately 12,000 miles per year, but those who drive less than 7,500 miles per year can benefit from significant savings. Safeco provides a discount of up to 20%. However, in order to qualify for this discount at certain companies, you may be required to sign up for driver monitoring technology, which we will discuss further below.

Driver status car insurance discounts

These are discounts based on the driver rather than their driving habits. Whether your child is a good student or you have served in the military, your personal profile can help you save money on car insurance.

Good-student discount (5% to 25%)

Rates for young drivers are extremely high until the age of 25. However, if you maintain a B average, you may be eligible for savings of up to 25% in the form of a good-student discount. You simply need to be a full-time student and provide your insurance company with proof of your academic records.

Away-from-home student discount (5% to 25%)

If your child driver left their car at home when they went to college and the college is more than 100 miles away, you can save money on your policy as a parent. You can inquire about this discount immediately or at your next renewal. This discount should result in a significant reduction in your liability coverage, as we have seen up to a 25% reduction in premiums.

Professional and academic organizations, employee discounts (2% to 10%)

Most insurance companies have affiliations and partnerships with other organizations that provide additional discounts to their members or employees. These are typically trade or professional organizations, as well as university alumni groups. Geico currently works with over 500 professional and university organizations, with members earning membership discounts when they purchase a policy. Geico offers a 3% discount on the total policy premium to these members.

Senior/mature driver (5% to 10%)

Drivers over the age of 55 may be eligible for additional premium discounts in the form of a "senior" or "mature" discount. Allstate provides a 10% discount on basic liability and physical damage coverage. Some insurers will also reward drivers over the age of 55 who complete a mature driver improvement course online and receive certification. This course covers the same ground as a defensive driving course and helps you brush up on the most recent defensive driving tips.

Military and federal employee (8% to 15%)

If you have served the United States in the military or through federal government employment, you can find companies that value your service. Geico, for example, offers active service members and federal employees, as well as veterans and retirees, an 8% to 15% discount on their entire policy premium. Other companies, such as USAA, only sell auto insurance to military and defense personnel and extend that benefit to up to two generations of family members.

Policy car insurance discounts

The policy car insurance discounts are determined by your policy. You can modify your policy in certain ways to receive specific discounts. Sometimes the discounts are applied automatically, and other times you must request them.

Homeowner car insurance discount (varies, 3%)

Some insurers offer a homeownership discount even if the policyholder has not previously purchased homeowners insurance from them. When available, the discount is applied to liability, physical damage, personal injury protection, and uninsured/underinsured motorist premiums — the majority of the different types of coverage, with the exception of rental and towing coverage. We discovered that Progressive offers a 3% discount to qualifying homeowners. Some insurers will honor both bundling and being a homeowner, and the discounts are usually applied automatically when you get an online quote. Bundling discounts are discussed further below.

Multi-car discount (varies, up to 25%)

We've seen insurers like State Farm offer up to a 25% discount for a multi-car policy. For a 34-year-old couple insuring their Toyota Camry and Nissan Versa, combining their policies could save them nearly $200 per year on car insurance. Most insurers require that all vehicles on the same policy be owned by people related by blood or marriage, but in some cases, insurers will consider unrelated roommates for multi-car discounts (given that they might jointly own or drive the vehicles).

Bundling/multi-policy discount (5% to 25%)

Consumers who have multiple assets to protect, such as their car and home, may be able to save money on their overall insurance costs if they place them with the same company. The bundle can be purchased in a variety of combinations, including auto plus home, auto plus boat, and auto plus home plus umbrella policy, to name a few, with each resulting in a different premium reduction. While discounts are not always applied equally across insurance lines, insurers offer discounts ranging from 5% to 25% off the total auto insurance premium for bundling policies.

Savings for signing early (~3%)

Look for the early signing discount when shopping for insurance before your current policy expires. This is a more uncommon discount; less than half of the major insurers we investigated offer it. When it becomes available, you can save anywhere from 3% to 10% off your total policy premium, depending on how far in advance you sign up for the policy. Travelers, for example, offer this discount if you sign up three days before the expiration of your current policy.

Paid-in-full reduction (5% to 10%)

Insurers encourage you to pay your entire six-month or annual premium in advance by offering a 5% to 10% discount. This is a separate option on your quote page that you must select, and it usually necessitates paying the full premium on the policy's first effective date in order for the discount to apply.

Electronic billing/autopay (5% to 10%, or $30)

If you have opted for electronic billing, you may be able to save money on your premiums. This type of discount is uncommon; typically, national and larger insurance companies with online presences offer it, whereas smaller carriers lack the infrastructure.

Nationwide and Allied offer a $30 discount for setting up automatic payments via electronic funds transfer (EFT). Allstate offers two separate discounts in this category: 5% for automatic EFT payments and 10% for going paperless with your bills.

Loyalty discount

Insurers compete for business by offering loyalty discounts to loyal customers. While some providers, such as Geico, refer to multi-car and bundling discounts as loyalty discounts, we've seen other insurers reward customers who have been with the same carrier for a long time. This discount does not always take the form of a premium reduction, but it may be more rewarding in the long run.

What exactly does accident forgiveness entail? Loyal drivers could save up to 20% in total by avoiding the accident surcharge on their liability and collision coverage premiums. The specifics of loyalty programs differ depending on the insurer and state.

One word of caution for loyal customers: if price is important to you and your insurer has consistently raised rates, it may still be worthwhile to shop around for rates. According to some studies, such as one conducted by the Office of Public Insurance Counsel in Texas, long-term policyholders could save more than 19% on their annual auto premiums by switching.

Vehicle car insurance discounts

If your vehicle has certain features, such as an anti-theft device, VIN stitching, or anti-lock brakes, you may be eligible for a few discounts. These modifications to your vehicle give your insurance company peace of mind because they can prevent costly damage.

Anti-theft car insurance discount (5% to 15%)

These devices and features may provide drivers with peace of mind, deter actual theft, or aid in the recovery of stolen vehicles, but they do little to reduce your car insurance premiums. Drivers can save 5% to 15% on comprehensive coverage (up to 25% when insurers allow stacking), but comprehensive premiums are typically the cheapest part of your total coverage. Because these devices start at around $20 and can cost up to $200 or more, the costs usually outweigh the benefits.

We do not recommend purchasing anti-theft devices in order to save money on your insurance premiums.

Consumers should think of them as an investment that can help them avoid further property loss and the resulting premium increase. If your vehicle is frequently the target of auto thefts, investing in one of these anti-theft devices may be worthwhile.

Here's an example of a theft prevention discount in action: A State Farm customer pays $180 for a hood lock and a passive disabling system. The company offers drivers a 10% discount on comprehensive coverage premiums. Based on the average annual comprehensive coverage premium of $134, this equates to a savings of only $13.40.

Anti-lock brakes (5% to 10%)

Most insurers require a factory-installed anti-lock braking system (ABS) in order for a vehicle to qualify for this discount. As a result, when you get a quote, this discount is usually applied automatically. However, if you don't see this discount on your policy, always ask your agent to double-check. The discount could mean a 5% to 10% reduction in your collision coverage premium, which, depending on your vehicle type and deductible, could translate to a savings of $20 to $100 per year.

Passive restraint (25% to 30%)

Front airbags and seat belts are examples of passive restraint equipment. Since 1983, all new cars have come standard with passive restraint systems, and insurers offer substantial discounts for at least driver's and front passenger seat airbags and seat belts. When the vehicle meets the requirements, passive restraint discounts of 25% to 30% are applied to the personal injury protection or medical payments coverage premium on the policy.

New car (10%)

A new car discount may be available for drivers insuring a new car to reduce the cost of your physical damage coverage premium. This varies greatly depending on the insurer and state, as well as how "new" is defined. For example, Allstate provides new car discounts if the driver is the vehicle's first title owner and the vehicle is either current or one year prior to the current model year. However, once drivers and their vehicles qualify, the 10% discount will be applied to the insured's policy for three years without further renewal action.

Daytime running lights (~3%)

Daytime running lights, like your nighttime headlights, are thought to reduce collisions. While car manufacturers do not always include daytime running lights, having them could result in a 3% discount on almost the entire car insurance premium (except for comprehensive coverage). Although there is still debate about the effectiveness of daytime running lights, several large insurers, including but not limited to Geico, Allstate, and State Farm, offer this discount.

Usage-based discount programs

A number of insurers have gone above and beyond to reward safe driving by developing devices that track a customer's driving habits. Drivers can include a widget that tracks metrics such as speed, mileage, time of day driven, and braking activity. Here are a couple of examples:

• Progressive Snapshot
• Allstate Drivewise
• Travelers IntelliDrive

Drivers receive a device upon policy enrollment that connects to their car's on-board diagnostics (OBD) port (standard for cars manufactured after 1996), allowing the insurer to record their drivers' data. Your car insurance company will determine whether you are eligible for a usage-based discount or rewards program based on data collected over a six-month period. According to the company's reports, Snapshot discounts range from 0% to 30% off your total premium with Progressive, with the average being 6%.