Auto Insurance Policy
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Everyone needs to insure their car, but navigating a car insurance policy can be a headache, especially when it comes to figuring out how you can save the most money. Insurance companies know that the more difficult it is to comparison shop, the more likely you are to agree to the first auto policy and pricing that you're offered. However, there are many ways to save money the next time you shop for auto insurance, and the amount you’ll save on your car insurance premiums can range from insignificant to substantial. You won’t know until you ask, and the available auto insurance discounts may surprise you.

To help you navigate this process, we’ll look at some of the most common car insurance discounts that insurance companies offer, including policy bundling discounts, driver education discounts, and car insurance discounts for students, teachers, active duty military, and veterans. Keep in mind that some of these discounts won’t be available in every state or with every insurance company. You can learn more about car insurance in our how car insurance works guide and figure out the right insurance coverage for your needs and budget by checking out our guide to how much car insurance you need.

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Bundling or Multi-Policy Car Insurance Discount

If you buy two or more insurance policies through the same insurance company, you may be eligible for a bundling discount, also known as a multi-policy discount. When you’re getting quotes, think about what kind of insurance you actually need. If you have multiple policies, even beyond an auto insurance and a homeowner’s or renter’s policy, see if you can get them all with one insurance company. The more types of insurance you can bundle, including additional vehicles, the more you are likely to save.

Finding a company that will give you a worthwhile auto insurance bundling discount will probably require some research. You can start with your current insurance company, but be prepared to shop around. While most major insurance companies offer a bundling discount of between 10 and 20 percent, smaller carriers are less likely to offer this type of discount. Though bundling is very common, it’s unlikely that you’ll be able to get quotes online; you’ll have to call instead. This is because insurance companies often make it difficult to comparison shop.

Unfortunately, a bundling discount might not save you as much money as you expect. Bundling saves money for some customers, but this strategy won’t work for everyone, according to a 2017 survey published by InsuranceQuotes. The survey examined the largest insurance carriers, using the statistics of a hypothetical “ideal” customer: a married 45-year-old woman with good finances and a clean driving record. If you are too young, too old, unmarried, have a bad credit score or a poor driving record, or rent your home instead of own, these factors can count against you (which is typical of buying insurance across the board, not just with bundling). The survey also found that customers in some states wouldn't save much, if anything. For example, insurance companies are wary of discounting homeowner’s insurance in flood-prone Florida. Insurers are also reluctant to offer savings to customers in states where insurance costs are already lower than average.

If you find an insurance company willing to offer you discounts on bundling, you’ll enjoy a couple benefits. The nationwide average savings for a bundling discount is about 16 percent, according to the InsuranceQuotes survey. In addition to the savings, you’ll appreciate the convenience of using one company for all your insurance policies, which can save you time and hassle.

Good Student Car Insurance Discount

Many car insurance companies offer student discounts to high school and college students. These discounts help insurance companies attract new customers who insurers hope will become loyal customers. Student discounts usually require the customer to maintain good grades, which is the insurance industry’s way of determining that a student (who probably doesn’t own a home or have an established credit history) has the kind of responsible habits that will result in a safer driving record.

If you’re a student, or the parent of a student, start by calling your own auto insurance company to see if they’ll offer you a discount. Each insurance company has different criteria, though most require the student to be under 25 years old and to maintain status as a full-time student. You’ll have to provide proof (usually in the form of a report card or transcript) that your grades meet your insurance company’s requirements. Those requirements vary from company to company, and you may have to call to get specific information. For example, Nationwide specifies a B average, while Allstate’s website simply says “good grades.” Other possibilities include a 3.0 GPA or higher, placement on the dean’s list or honor roll, a class ranking in the top 20 percent, or a high ranking in college placement exams, such as the SAT or ACT.

Graduate in car with diploma
(Sarah Fix Photography Inc / Getty Images)

The main benefit of a good student discount on car insurance is that if you qualify, you save money for something you’re doing anyway. If you’re right on the edge of maintaining the required grade point average, a discount might provide the extra motivation you need to study more. There aren’t really any drawbacks to a good student discount, except that you’ll lose the discount if you no longer qualify, your grades slip, your full-time student status changes, you graduate, or you reach your 25th birthday.

It’s hard to estimate exactly how much you’ll save with a good student discount, since many car insurance companies don’t specify how much of a discount they’ll offer. Others advertise a range, but you won’t know where you fall within that range until you call and talk to an agent. For example, State Farm offers a discount of up to 25 percent for good students (which means it could end up being less than 25 percent), and many other big insurance companies follow this model. With some companies, the discount could be as low as 5 to 15 percent.

Some car insurance companies may also offer a discount if a student is going away to school and leaving his or her car at home. If that’s the case in your household, ask if your company will reduce the rate on a car that will not be driven most of the year.

Tracking Device Car Insurance Discount

Tracking device discounts are opt-in programs offered by some of the major insurance companies, such as Progressive, State Farm, Allstate, and American Family Insurance. Most companies send you a tracking device that plugs into your car’s OBDII port to capture and analyze data straight from your car’s computer. They’ll see how much time you spend behind the wheel, how fast you drive, how quickly you accelerate, and how hard you brake, among other information. Many of these programs can sync this data to your smartphone to let you analyze your own driving habits. State Farm’s program analyzes data from OnStar-equipped GM vehicles or from the customer’s smartphone.

The upsides to tracking discounts are straightforward: You could save money on your auto policy, and it might inspire you to drive more safely. However, there are a couple key factors to keep in mind. First, you’re trading away a lot of private information to get that discount. Since tracking device discounts were first rolled out by in 1998, critics have charged that the devices violate customers’ privacy, especially since insurance companies won’t specify how the data is used beyond evaluating drivers’ habits. These devices tell your insurance company about your driving habits, but they also tell them more personal information, like where you go and how often. Only you can decide whether that information is worth a discount. The second consideration is that if your insurance company sees anything on your tracker that they don’t like, they are not only likely to take away your discount but also likely to charge you more than they did before. And, critics say there may come a time when tracking devices become so commonly accepted that they are compulsory instead of optional.

Most insurance companies that offer a tracking device discount will say that the amount of your discount varies based on your driving habits, which means you won’t even know what your discount is, or if you’ll get it, until you’re using the device. Progressive, which introduced the first such program, offers a discount of about $25 when you sign up and another discount ($130 on average) when you complete the program and renew your policy after six months. In 2017, automobile site the Drive evaluated the American Family Insurance program, which offers a 5 percent discount at signup and up to 40 percent off after six weeks (the Drive’s writer got only a 2 percent discount after six weeks). In other words, your discount depends somewhat on your safe driving habits, but insurance companies give themselves a lot of leeway in actually providing the discounts they advertise.

Driver Training Car Insurance Discount

If your insurance company offers a driver training discount, you can save some cash by taking certain classes that will help sharpen your driving skills. These discounts may also be called driving school or defensive driving discounts. There is no industry standard to determine who qualifies for a driver training discount. Companies that offer driver training discounts include State Farm, Geico, Allstate, and Liberty Mutual.

To qualify for State Farm’s discount, you must ask your agent for a list of eligible courses to see what is available in your state. Geico’s requirements are more complicated because they vary from state to state, although unlike most insurance companies, Geico also accepts certain online courses. For example, Geico customers in New York can save up to 10 percent. In Illinois, the program can save you up to 10 percent but is offered only to drivers over 50 years old. Geico customers in California can save up to 5 percent, but the driver must be at least 50 years old, and the course won’t apply if it was ordered by a court or part of another government-ordered obligation. Liberty Mutual appeals to families with drivers under the age of 21, but you’ll have to talk to an agent to get a quote. Some companies extend a discount to a teen driver who successfully completes a school- or state-sponsored driver’s education course. Driver training discounts save the average customer about 10 percent, but the discounts do vary. If your insurance company doesn’t advertise these discounts, it’s always worth the time to call and ask.

Driving test with cones
(Don Mason / Getty Images)

In addition to the savings, you may find that the driver-training course is actually beneficial. A well-thought-out course will teach you better ways to deal with everyday driving scenarios, which will help you take responsibility for your own safety. You might even enjoy it -- and if your new skills keep you from an accident, you'll net good driver discounts by staying accident-free, leading to more savings. Of course, there are disadvantages. You might not qualify for a course, depending on factors such as your age and your state of residence. And even if you do qualify, the cost of the course could be more than the amount you save. Furthermore, you’ll have to demonstrate that the course was actually beneficial. That is, if you get into an at-fault accident or start racking up tickets, your insurance company may take away the discount.

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Affinity Group Car Insurance Discounts

Some insurance companies offer insurance discounts, in the form of bulk rates, to affinity groups. Examples of affinity groups include businesses (like your employer), clubs such as AAA or AARP, certain credit unions, and groups such as networking alliances or alumni associations. Many insurance companies, including Geico, Nationwide, Travelers, and Liberty Mutual, offer affinity group discounts. To see if you qualify, check your employer’s benefits documentation to see if your company or organization has aligned with a specific insurance company. These discounts are especially common among military, veteran, or teacher organizations. You can also ask your current insurance agent if they offer any affinity group discounts. Some states have laws that prevent these types of discounts, so depending on where you live, you might not be able to save money this way.

Sometimes insurers sweeten the deal with perks like a locked-in rate for a certain term length, dedicated customer service lines, or billing via paycheck deduction for a company plan. If you decide to get a policy through your employer or club’s affinity package, it’s usually a straightforward process, since the available policies are usually simplified. However, this key benefit is also its key downfall. The nature of a bulk rate means that the insurance company offering discounted coverage to your group probably isn’t willing to negotiate or customize your policy. They may offer a choice of packages, or they may offer just one, but if you need special considerations, like extra coverage on a vintage car, this might not be your best option.

A typical affinity group discount is from 5 to 20 percent, though your actual savings depends on the terms your group has negotiated with the insurance company. Discounts of 10 percent are common with membership in groups like AAA and AARP. You can usually combine affinity group discounts with other available discounts.

Teacher Car Insurance Discounts

In addition to affinity group discounts, teachers may be able to score special rates on car insurance, along with other perks. For example, Liberty Mutual waives the deductible if a teacher’s car is vandalized or damaged in a collision while on school property or at another work-related function. If school property or teaching materials are stolen from a teacher’s car, Liberty Mutual will provide compensation of up to $500.

Other insurance companies that extend special rates to teachers and educators include Esurance, Geico, and Farmers. These discounts may vary by state or professional affiliations.

Military and Veteran Car Insurance Discounts

Military personnel, military veterans, and their families are offered special rates on car insurance through most major insurance companies and may have access to other benefits. Geico, for example, offers discounts of up to 15 percent to active or retired military personnel, members of the National Guard and Reserves, and members of certain military-related professional organizations. USAA, a company that works exclusively with military and veteran households, offers special rates as well as discounts of up to 15 percent on vehicles parked on a military base and up to 90 percent on vehicles stored securely during a deployment. State Farm, Progressive, Esurance, Liberty Mutual, Nationwide, and Farmers are among the other large insurance companies that offer various military discounts.

Teacher instructing class
(Tom Werner / Getty Images)

Even if you find a lower rate elsewhere, keep in mind that insurance companies that offer military discounts are generally more sensitive to the fact that a military household’s needs and circumstances may change on a whim. These companies will probably be more flexible if you need to change, cancel, or suspend coverage due to a sudden deployment or other special situation.

Equipment Car Insurance Discounts

If your car has safety features that reduce or minimize the likelihood and impact of crashes, you would assume your insurance company would be happy about that. Same with security systems that deter thieves or help recover the vehicle after it is stolen. Insurers are happy about them, but perhaps not enough to give you a substantial discount.

As of summer 2016, only two of the 11 largest insurers, The Hartford and Liberty Mutual, offered specific discounts for automatic emergency braking, which is one of the most effective new technology features available. These systems use radar, sensors, or cameras to detect when the vehicle is approaching an obstacle and automatically applies the brakes to avoid or reduce impact. Other insurers say that customers who own vehicles with these features already pay lower rates. Automatic emergency braking is supposed to be standard in all new cars by 2022. Once more cars have these systems, and it’s easier for insurers to verify that the car is properly equipped, the discounts may be more common. There are potential drawbacks, though. Again as of 2016, insurers were concerned that the sensing equipment embedded in the front of cars equipped with automatic emergency braking and similar technologies could drive up repair costs if damaged in a collision.

The Hartford offered a 3 percent discount to customers whose cars included automatic emergency braking and similar features, but only in Illinois, Ohio, Minnesota, Oklahoma, and Arkansas. Liberty Mutual told the Associated Press in 2016 that they couldn’t provide a figure on an average discount for such features because there is too much variation in policies from customer to customer. However, Liberty Mutual does offer discounts for collision avoidance systems (including automatic emergency braking), adaptive cruise control, and lane departure warning. Other features that have the potential for savings are electronic stability control, tracking systems, alarms, and passive or active devices that disable the vehicle in the event of a theft. Dash cameras generally won’t help reduce your rates but could help absolve you of fault in a collision.

So, what are these features worth? The latest information available is a couple years old, but the consensus is that most policyholders weren’t likely to save more than 1 percent per year, even for features that were demonstrated to reduce crashes and theft. If your car has any of these features, the bottom line is that you did well by investing in a safer vehicle and any insurance savings are icing on the cake.

Low Mileage Car Insurance Discounts

If you don’t drive much, you might think you should save some money on insurance. After all, the less you’re on the road, the less risk you face. You’re not alone in thinking this, but most insurance companies don’t agree. A scant few insurance companies offer discounts for low mileage, which is self-reported but may occasionally require verification. Some major insurance companies offer low mileage discounts as paired with and tracked by a tracking system (like those discussed in the “Tracking Device Discount” section), and one, Metromile, offers pay-per-mile insurance.

In general, you’re considered a low-mileage driver if you rack up between 7,500 and 15,000 miles per year. If you drive even less than 7,500 miles, you might be eligible for additional savings, though perhaps not as much as you'd expect. Insurance comparison site the Zebra estimates that drivers who drive less than 7,500 miles a year save an average of $71 on insurance premiums compared to drivers who drive more than 15,000 miles a year. Drivers in California are a notable exception to the rule and may save even more by driving less, reportedly up to 20 percent. That is because insurers in California evaluate more factors to calculate coverage and premiums, and they are required to consider mileage.

A 2015 study by the Consumer Federation of America reported that Progressive, Farmers, and Allstate, which were three of the five largest auto insurers at the time, did not provide discounts for very low mileage drivers, which they defined as those who drove less than 5,000 miles per year. The study noted that State Farm was the only big company that offered lower rates for lower miles. It looks like little has changed. Three years after the study, Progressive explicitly states that they don’t adjust rates for low mileage, but that drivers interested in paying lower rates for driving less should use the Snapshot tracking system, which will automatically adjust rates for driving time and other factors. Currently, State Farm offers discounts of about 5 percent upon enrollment in the Drive Safe & Save low-mileage program, and discounts are adjusted based on actual miles driven.

Odometer
(Sarah Shelton / U.S. News & World Report)

Other than the fact that you’re saving wear and tear on your car, there are few obvious advantages to low mileage discounts. The disadvantages depend on the hoops you have to jump through to score one and the fact that if you go over your mileage limit, your rates will go back up.

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The Takeaway

Whether you’re an adopter of the latest anti-theft technology; a member of a specific group, such as a teacher, veteran, or student; or simply a safe and courteous driver with a good record, there are probably discounts that you can take advantage of, if you haven’t already. It’s always worth a call to your insurance company to ask about potential discounts, and you shouldn’t be afraid to comparison shop to help save money.

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