Car insurance discounts: what they are and how to claim them

How car insurance discounts work

A discount is a reduction an insurer gives because something about you, your car or your policy suggests you will cost it less. Insuring two cars with the same company, for example, can lower the company's sales and administration costs. Insurers expect a driver with no recent accidents to file fewer claims, and a car with an anti-theft device to be harder to steal.

Three points help you get the most from discounts:

• Discounts are not universal. The Texas Department of Insurance notes that each company decides which discounts it offers and how much they are worth. Two insurers can both advertise a "good student discount" and price it very differently.
• Discounts often apply to only part of the premium. A discount for anti-theft equipment, for example, may reduce only the comprehensive coverage that pays for theft. New York's financial regulator says exactly this about anti-theft discounts in that state.
• The final price is what counts. The Insurance Information Institute (Triple-I) stresses that the key to savings is the final price, not the number of discounts. A company with fewer discounts can still be cheaper overall.

Common types of car insurance discounts

The discounts below appear in consumer guides from the NAIC, the Texas Department of Insurance, the New York Department of Financial Services and Triple-I. Names vary by company, and not every insurer offers every one.

Multi-policy (bundling) discount

You insure your car and another policy, such as homeowners or renters insurance, with the same company. This is one of the most widely offered discounts, but a bundle is not always the cheapest option. Triple-I notes that you may save by buying from different companies instead. Our bundling guide explains how to compare.

Multi-car discount

You insure more than one vehicle on the same policy or with the same company. New York's regulator notes that this discount may apply when all of the household's cars are with one insurer.

Good driver, safe driver or accident-free discount

You have no at-fault accidents or moving violations for a set number of years. Each insurer sets its own rules, except where state law sets them. California is the clearest example: every insurer must offer coverage to Good Drivers, and those rates must be at least 20% lower than the rates for drivers who do not qualify. To count as a Good Driver there, you must have been licensed for at least 3 consecutive years and have few or no points. Read more about how your driving record affects price.

Good student discount

Young drivers who keep good grades may qualify, and the NAIC lists it among the discounts to ask about. Insurers set their own age and grade rules, and some also offer a discount for a student who attends college away from home. See car insurance for young drivers and teen drivers.

Driver training and defensive driving discounts

Completing a driver education course (for new drivers) or a defensive driving course (for experienced drivers) can earn a discount. Some states require insurers to give one for approved courses. Our defensive driving course guide covers New York, Pennsylvania and Florida.

Safety feature discounts

Airbags, anti-lock brakes, daytime running lights and collision avoidance systems can qualify. New York lists factory-installed anti-lock brakes, passive restraints such as airbags, and factory-installed daytime running lamps among the discounts every insurer in that state must offer.

Anti-theft discount

Alarms, devices that disable the engine, tracking devices and window etching can qualify. New York requires insurers to offer discounts for electronic tracking devices and window glass etching. Because theft is covered under comprehensive, these discounts usually affect only that part of the premium.

Low-mileage and usage-based discounts

Drivers who cover fewer miles each year may pay less, and Triple-I notes that carpooling to work may also qualify. Usage-based or telematics programs track how you drive through an app or device. An NAIC shopping guide notes insurers usually give a small discount just for joining. See mileage and telematics.

Pay-in-full, autopay and paperless discounts

Some companies reward paying the whole term up front, paying automatically from a bank account, or receiving documents by email. These are easy to get and usually small, but paying in full can also avoid installment fees. See payment options.

Affiliation and group discounts

Some insurers give discounts through employers, professional groups, alumni associations, unions, clubs or the military. The NAIC lists membership in an organization or working for certain employers as a possible discount. See also car insurance for military members.

Loyalty and continuous coverage discounts

Some insurers reward staying with them, and an NAIC shopping guide notes rates are lower for drivers who keep a car insured than for drivers who have a gap in coverage. Loyalty discounts are worth weighing against what other companies would charge you.

Mature driver discount

Some insurers offer a discount to older drivers, often tied to completing a mature driver course. Pennsylvania requires at least 5% for drivers 55 and older who complete a PennDOT-approved course. See car insurance for senior drivers.

Discounts required by state law: examples

Most discounts are voluntary. A few states require them by statute or regulation. These are examples we could confirm from the state regulator or statute; other states may have their own rules, so check with your state insurance department.

Which discounts you might qualify for

How to make sure you get every discount

1. List your possible discounts. Use the table above to note every discount your household might qualify for.
2. Check your declarations page. Most insurers list applied discounts on it. The NAIC suggests checking that the discounts you expect actually appear.
3. Ask your current insurer directly. Ask, "Which discounts am I not receiving, and what would I need to do to qualify?"
4. Send proof. Good student discounts usually need a report card or transcript, and course discounts need a completion certificate.
5. Ask each new insurer the same questions. When you compare quotes, make sure each one includes every discount you qualify for.
6. Compare total prices, not discount lists. Pick on the final price for the coverage you want.
7. Recheck after life changes. A new car, a student going to college or a move can add or remove discounts.

Discounts versus coverage cuts

Discounts lower the price without changing what your policy pays, which makes them the best kind of saving. Be cautious with offers that bundle a discount with less coverage, such as a lower premium for dropping uninsured motorist protection. That is a coverage cut, not a discount. Our hub page on saving money on car insurance lists which strategies keep your protection and which reduce it, and our premium factors tool explains the other things that shape your price.