Policy renewal/loyalty discounts

Insurance companies want to keep your business, and many will reward you with lower rates if you continue to renew your policy. If your renewal is approaching, contact your insurer to find out if you’re eligible for a loyalty discount.

That said, you should still explore other options. Even if your insurer does offer a loyalty discount, it may not be enough to beat lower rates offered by other insurers.

Paid-in-full discounts

When policyholders pay their entire premium up front, they can often receive a paid-in-full discount from their insurer. If you’re purchasing a new policy, you may see paid-in-full discounts when you complete the quote process. If you renew an existing policy, contact your insurer to determine if paid-in-full discounts are available.

Some insurers also provide auto insurance discounts to policyholders who pay their premiums quarterly or semiannually instead of monthly. If making a full payment isn’t in your budget, find out if the insurer offers other payment schedule discounts.

Automatic payment discounts

Many car insurance companies reward policyholders who choose automatic payments. You can typically set up automatic payments using an electronic funds transfer (EFT) from your checking account or recurring payments using your debit or credit card.

Automatic payments can also be a great way to ensure your coverage doesn’t lapse, but they aren’t without drawbacks. If you choose automatic payments, you must have the funds available for withdrawal by your payment schedule.

If the funds aren’t available, you may be responsible for fees and penalties from your bank and insurer. It’s also possible that your insurer will cancel your policy for nonpayment.

Paperless discounts

Many companies entice policyholders to go paperless. Opting into a paperless feature generally means your bills and any other policy correspondence or documentation will be delivered via email, accessible online, or available through the company’s app.

Driver Behavior Discounts

Good driving discounts

If you have a clean driving record, meaning your driving history is free from accidents, speeding tickets, and other violations, your insurer will see you as a low-risk driver. That can earn you lower premiums in general, but some insurers also offer a good driver discount.

Depending on the insurer, You may still be eligible even if you haven’t had an accident or violation within the past three to five years.

Usage-based insurance discounts

Usage-based insurance (UBI) programs allow insurance companies to track key metrics, like speed, braking, and mileage, using a mobile app or a tracking device installed in your vehicle.

This type of program, sometimes referred to as black box car insurance, allows an insurer to tailor rates based on your driving habits and performance. UBI programs encourage safer, smarter driving to help lower your risk of getting into or causing an accident.

Some companies offer discounts to drivers who enroll in UBI programs.

Defensive driving discounts

A defensive driving course can help you become a safer driver, and depending on your insurer and where you live, it may even lead to lower car insurance rates. Many insurers reward drivers who take defensive driving courses by extending a discount once the course is completed.

Some providers offer these discounts to all their policyholders, while others offer them only to a specific group of drivers, like seniors or teens.

Low-mileage discounts

The less you drive, the lower the risk to you and your insurance provider. That’s why many auto insurers offer discounts for those driving fewer miles yearly. The definition of “low mileage” varies by insurer, but if you drive fewer than 13,500 (the national average), it’s worth asking your insurer about potential discounts.

Driver Characteristic Discounts

Good student discounts

Teen and young adult drivers generally have higher insurance rates, but good students (and their parents) may be able to unlock lower rates with good grades. Most of the car insurance companies we analyzed offer discounts for drivers who are full-time students and maintain good grades.

The definition of “good” differs by the insurer, so if you think it may apply to you or a driver on your policy, contact your insurer to find out.

Distant student discounts

If a student driver is on your policy and they’re away at school, you may qualify for a discount if their car stays home. Generally, the student must be enrolled full-time and be at least 100 miles away from home, but requirements and eligibility may vary by insurer.

Affinity Discounts

Employer-based discounts

Some employers negotiate bulk auto insurance rates for their employees. If yours does, you may be able to get a discount while you work there. Remember that these discounts are tied to your employment and will likely end if you are unemployed.

Even if your employer does have an agreement with a specific insurer, it’s still a good idea to look around. You may be able to find a lower rate elsewhere.

Profession-based discounts

Many top auto insurance companies offer perks for policyholders working in a specific field. Exactly which professions qualify for savings vary, but teachers and first responders are often included.

Organizational discounts

This type of discount is available to members of specific organizations, which varies by insurer. For instance, some insurers will give discounts to policyholders with an AARP card. Others may give you a percentage off if you are a member of an alumni association.

Military and veteran discounts

If you or another driver on your policy is a military community member, you may be eligible for lower rates. Many insurers offer military or veteran discounts to honour those that serve.

If this applies to you, it’s also a good idea to look into USAA car insurance exclusive to military members and their families. Its rates are among the lowest of those we’ve analyzed.

Read more about USAA and car insurance for military and veterans.

Vehicle-Based Discounts

Safety equipment discounts

Vehicle safety features can protect drivers and passengers, potentially creating less risk for insurance companies. Though not all companies have safety equipment discounts, some do. If you have common safety features – e.g., airbags, anti-lock brakes, etc. – in your vehicle, ask your insurer about available discounts.

Anti-theft feature discounts

Like safety features, anti-theft devices can decrease the risk of insuring your vehicle. Not all insurers offer this type of discount, but if you have an anti-theft system in your vehicle, it’s worth contacting your insurer to find out if you’re eligible for savings.

New vehicle discounts

Some car insurance providers will offer discounts for policyholders who drive new cars. While the definition of “new” varies by insurer, driving a car less than three years old could earn a percentage off your premium.

Other Ways To Save Money on Car Insurance

Below, you’ll find more ways to save as much as possible on your auto insurance policy.

Shop around when it’s time to renew

The Insurance Information Institute (III) recommends getting quotes from at least three insurance companies whenever looking for a new policy. Insurance rates vary widely from driver to driver and state to state, so you might be surprised to find out which company is the cheapest for you.

One thing to remember: Be sure to get multiple quotes for the same types and levels of coverage to give you an accurate comparison.

Call an agent for personalized coverage

Independent insurance agents can help you search for policies and the lowest rates. And by picking up the phone, you can talk to someone who can help you find discounts or specialized coverage that you might not be able to find online. Independent agents are not tied to a specific insurance company so they can help with quotes from multiple insurers.

Insurance brokers can also help you explore options across various companies. However, they cannot officially sell you the policy or bind coverage as licensed insurance agents can. They also typically charge fees.

Raise your deductible or lower your coverage

When you raise your deductible or lower your coverage, you get lower premiums. This strategy can be especially beneficial as your car loses value and won’t cost as much to repair. However, you’re taking a risk that you’ll have to pay more out of pocket if you are in a crash or your car is damaged some other way.

Maintain good credit

Good credit can show an insurer that you have a history of paying your bills on time. As such, drivers with good credit often pay lower rates than those with poor credit. If you have poor credit, improving your score may help lower your rates.

Learn how insurers may use your credit score to calculate an insurance score to help predict the likelihood you’ll file a claim.

Check insurance rates before buying a new car

It’s no secret that it costs more to insure some cars than others. For example, cars with greater theft rates or powerful engines may have higher premiums. But did you know you can check to see how a new car will affect your policy before buying it?

Before signing the paperwork, contact your insurance agent with the vehicle identification number (VIN) of the car you’re considering, and they can advise on how it will impact your premium.

Don’t pay for coverage you don’t need

Many consumers pay for car insurance products and add-ons they don’t need. For example, if you have roadside assistance from AAA, you don’t need to pay for that coverage again through your insurance company.

This can also happen with gap insurance Many people continue paying for this feature after they no longer need it. It may also be automatically included in your financing or leasing company agreement.

If you have reached a position of positive equity on your car loan or lease, meaning the amount you have left to pay is small, you can save money by dropping your gap insurance. Note, however, that some leasing companies require gap coverage to be in place for the duration of the lease.

Before making this move, however, you should also consider your level of risk tolerance. If it would stress you out to completely remove the coverages, look for a balance of cost and deductible that would make you feel comfortable. You may be able to make some changes to save yourself money without eliminating these coverages.

Don’t over-insure an old car

Almost all vehicles decline in value as they age. At some point in a car’s life, buying collision and comprehensive insurance is no longer worth the expense. This is especially true if you have high deductibles on those coverages and still pay a hefty premium.

If your vehicle’s value has declined to the point where you could replace it out of pocket without too much financial strain, you might consider removing the comprehensive and collision coverage from your policy.