There are several smart ways to save on your auto insurance premium — starting with asking your advisor about available discounts. The average full-coverage car insurance costs around $2,638 per year and about $220 per month — a significant portion of any budget.1 Over the last few years, premiums have increased due to higher vehicle purchase and repair costs, severe weather, rising claim costs and excessive litigation. When premiums rise, it's natural to look for ways to save money and find lower rates without sacrificing coverage.
Let's understand the different types of discounts and whether you might be eligible for one or more of them.
Common types of car insurance discounts in the US
1. Safe driver discount
Many insurers reward safe drivers with discounts on their car insurance. A driving record with no accidents, speeding tickets or charges for driving under the influence (DUIs) can reduce insurance premiums. These discounts can increase the longer you maintain your clean driving record.
How can telematics help you save on your car insurance?
2. New car discount
Cars less than three years old qualify for discounts from many insurers, often between 10% and 20%, because new cars have better safety features and a lower likelihood of mechanical failure. New cars are also easier to repair using original equipment manufacturer (OEM) parts, which are readily available and fit perfectly. Insurers can save money by reducing repair time and costs when a claim is made.
3. Low mileage discount
Many insurers offer a discount or savings on premiums for drivers who use their vehicles infrequently or drive fewer than 10,000 miles per year. Insurers consider such drivers low risk.
4. Payment method discounts
Many insurers offer small discounts when people pay their premiums in full or opt for automatic payments or renewals. These payment strategies lower administrative costs for insurers and are more convenient for policyholders.
5. Loyalty discount
Often, insurers can reward long-term customers with a loyalty discount on car insurance renewals with better premium rates or retention bonuses. Insurers offer this discount to reward dependable policyholders and encourage them to stay with the same insurer.
6. Senior driver discount
Drivers in the US over the age of 55 or 60 may qualify for a senior discount, especially if they have a clean driving record.
7. Good student discount
Young drivers often have high insurance premiums because they may lack enough driving experience to prove to insurers that they're safe on the road. With the good student discount, students in college can get significant savings if they perform well academically. To qualify, students should be under the age of 25 and maintain a B average (3.0 GPA) or higher. The thinking behind this discount is that students who perform well academically might be more responsible behind the wheel.
8. Eco-friendly vehicle discount
Insurers have begun to offer discounts to vehicle owners who drive hybrid or electric vehicles. Modern EVs and hybrid cars have advanced safety features and are considered low risk on the road.
9. "Bundling" discount
Combining or bundling your car insurance with other insurance types, such as home, renters or excess liability insurance, can lower premiums. By bundling, you can simplify your payments and reduce paperwork. Insurers also view multi-policy holders as loyal, with a lower likelihood of switching to another provider, and they reward this loyalty with significant discounts.
Aside from bundling, some other common auto insurance discounts you can opt for include usage-based insurance discounts, defensive driving discounts, profession-based discounts, military and veteran discounts, safety equipment discounts and more.
Which car safety features can lower your insurance premium?
Vehicles with certain safety features have a lower risk of accidents and help you access favorable insurance plans. The following features are the most common:
Daytime running lights: Drivers gain better visibility of oncoming traffic, lowering the chances of collisions.
Blind spot monitoring system: The system notifies the driver about a vehicle in their lane, to help prevent side-impact accidents.
Anti-theft devices: Insurers reward drivers who proactively prevent vehicle theft by installing professional anti-theft devices.
Adaptive cruise control: This system enables the maintenance of an automatic safe distance from the vehicle in front of you or even pedestrians, limiting collisions.
Electronic stability control: Stability control helps drivers keep control of their vehicle and avoid skidding, especially on icy roads.
Save money without compromising coverage: Connect with a Gallagher Personal Insurance advisor
The most effective way to save on car insurance is by practicing safe driving. However, as this article points out, additional measures can bring down the cost of your auto insurance. If you're reviewing your policy and want to explore discount opportunities without compromising on coverage, we can help by identifying which discounts you may qualify for and potential savings you may be eligible for from different insurers.
Get in touch with a Gallagher Personal Insurance advisor to find out more.
Car Insurance Discounts FAQ
How do I know if I'm eligible for auto insurance discounts?
You can qualify for auto insurance discounts by bundling multiple policies, installing anti-theft devices, maintaining a clean driving record and so on. Ask your advisor about the different discounts you qualify for.
Do car insurance rates go up when you turn 65?
Sometimes, car insurance rates can increase for senior citizens because insurers may consider them more likely to be involved in accidents, thereby placing them in a higher risk category. People in this age group can inquire with their advisor about a senior citizen discount for which they may be eligible.
Does my credit score affect car insurance?
In many US states, your credit score can affect your car insurance premium. Drivers with higher credit scores are often considered lower risk and may qualify for more affordable rates, while those with lower scores may need to pay higher premiums.