Quantcast

12 Hidden Discounts on Car Insurance

Published
January 15, 2014
Publication
Bottom Line Personal
Source
Amy Denise
Print
4516

Save $200 a Year or More

Do you have a master’s degree? Are you married? Do your kids get good grades? Strange as it may seem, answering yes to any of these questions—or other seemingly unrelated questions—might earn you a discount on your auto insurance policy.

You may know that insurers often offer discounts to policyholders who take defensive-driving classes or install antitheft devices in their cars. But those are just two of the many discounts available—including some that are completely unrelated to your vehicle or your driving skills.

These discounts sometimes subtract 15% to 20% or more from collision, liability, comprehensive and/or overall premiums. Policyholders usually are allowed to combine discounts to increase their savings, though total discounts often are capped, sometimes at around 25%. The average auto insurance policy costs around $800 a year, so that 25% off represents an annual savings of $200—possibly more if your coverage is especially expensive.

Don’t assume that your insurer will automatically apply all of the available discounts. It’s often up to the policyholder to inform the insurer that he/she qualifies. That’s especially likely if you didn’t qualify for a discount when you initially signed up for the coverage but do now.

The discounts vary dramatically in type and size from insurer to insurer, and even from state to state with the same insurer.

If any of the discounts listed here fit your situation, call your insurer to find out whether it’s available and, if so, whether you currently are receiving it. When you shop around for your next auto insurance policy, ask insurers which discounts are available to you and make sure that their price reflects the discounts.

Among the discounts…

  1. Good-student discount. If there’s a high school or college student in your family, your auto insurance probably is pretty pricey—young drivers are charged steep rates. But if one or more of the students on your insurance ­policy does well in school, there might be a way to trim your bill. More than 75% of insurers offer discounts to students under age 25 who get good grades. Good students tend to be safer drivers than their less academic-minded classmates.

    Rules vary, but a 3.0 GPA often is required. In some cases, the student must maintain this GPA…in others, he need only achieve it in the most recent semester to qualify for the discount in the following policy period.

    Average savings: 16%.

  2. Marriage discount. Tying the knot makes you eligible for a discount with about 40% of all auto insurers. Insurers have found that married people tend to be safer drivers than ­unmarried ones. In some cases, even civil unions qualify.

    Average savings: 14%.

  3. Low annual mileage discount. The fewer miles you drive, the lower your odds of getting into an accident. Your insurer likely asked you to estimate the length of your daily commute and/or the number of miles you drive each year when you applied for coverage. But perhaps you overestimated these distances or perhaps you’re driving less now than you were then. Calculate your commute and annual mileage. If you drive substantially less than the national average of 15,000 miles a year, call your insurer to confirm that you’re receiving any discounts you’re due.

    Average savings: 11% for car owners who drive less than 5,000 to 8,000 miles per year. Smaller discounts may be available to car owners who drive more than this but less than 15,000 miles per year.

  4. Farm-vehicle discount. Around 40% of all auto insurers offer discounts based on “use” of the vehicle, such as farm use. The odds of getting into an accident with another vehicle are much lower when a vehicle is driven primarily on a farm.

    Average savings: 10%.

  5. Facebook “like” discount. Allstate’s Esurance Web site offers a discount to residents of Texas and Arizona who “like” Esurance on Facebook.

    Savings: 10%.

  6. Membership discounts. Insurers often offer discounts to members of clubs and associations with which they have partnered. These could include professional associations, workers’ unions, large employers or membership organizations such as AARP or AAA. You even could qualify for savings based on the college you attended or the fraternity or sorority you belonged to decades ago.

    Examples: Geico offers a discount of up to 8% to members of Mensa, the high-IQ organization, and up to 8% to active and retired federal employees. Country Financial offers up to 10% off for full-time teachers of kindergarten through 12th grade and up to 5% for emergency first responders. Allstate’s Esurance offers up to 15% to students and alumni of the Pacific-12 collegiate athletic conference schools who reside in Arizona, Colorado, Oregon and Utah.

  7. Up-front payment discount. About half of all insurers offer a discount for paying premiums in full at the start of the policy period rather than in monthly installments. The savings can be significant, so if you can afford to pay in advance, it’s often worth doing so.

    Average savings: 9%.

  8. Bundled-policy discount. Insurers often offer discounts to customers who purchase both auto and homeowner’s insurance from the same company. But many people don’t realize that this bundling discount also might be available if you combine auto insurance with renter’s insurance, life insurance or some other type of insurance.

    Average savings: 9%.

  9. Advance-purchase discount. More than 25% of auto insurers offer a discount to existing customers who renew their coverage seven to 10 days before the old policy expires, though this varies.

    Examples: In Florida, Travelers, Allstate, Progressive, Safeco and Infinity are among the insurers offering this discount. Some insurers extend this discount to new customers who sign up for coverage well before their current policy with a different insurer expires.

    Average savings: 8%.

  10. Owning a home. Insurers have found that home owners are less risky as customers because they tend to act more responsibly and are less likely to file claims.

    Average savings: 6%.

  11. Automatic-payment discount. Around one-third of insurers offer discounts to customers who agree to have their premiums automatically withdrawn from their bank accounts.

    Average savings: 4%.

  12. Advanced-degree discount. A small number of insurers offer discounts to customers who have earned master’s degrees or PhDs.

    Average savings: 4%.

Source: Amy Danise, editorial director at Insure.com, an independent Web site that provides articles and tools to aid consumers in making insurance decisions. It recently conducted a study of nearly 25,000 auto insurance discounts nationwide.