They could save you some money!
Do You Know About These Auto Insurance Discounts?
by Mark Heidelberger
Is Auto Repair Maintenance Insurance Worth the Cost?
How to Negotiate an Auto Insurance Claim
Finding an Auto Club
With 47 million new drivers taking to the roads between 1990 and 2014, the need for insurance only grows with each passing year. And it's not getting any cheaper. A January 2016 report from the National Association of Insurance Commissioners says the average cost of an auto insurance policy rose 3.3 percent between 2012 and 2013 alone. One obvious way to keep costs low is to price shop. Seek out quotes from various insurance providers and choose the one that best fits your budget. According to State Farm agent Paul Cashman, a 30-year veteran of the industry, general quotes are typically based on the driver's age, zip code, type of car, and driving record. However, purchasing insurance based on these factors alone without considering the various discounts each insurer offers means you could be leaving money on the table.
Bundle your auto insurance with other products the insurer offers, such as homeowners, renters, life, or umbrella insurance. Some companies even offer discounts for buying non-insurance products like Roth IRAs. In the case of, say, renters insurance, the discount on the auto portion could be twice the cost of the renters policy, meaning you actually pay less in total for having both than for only having auto insurance. Cashman notes that bundling auto, renters, and umbrella policies can save you up to 22 percent on the auto, 22 percent on the renters, and 50 percent on the umbrella.
Premiums are calculated partly on how many miles you drive annually, so living close to your place of employment or even retiring could reduce your premiums. A 1993 study by the University of Michigan's Transportation Research Institute noted that drivers 75 years of age and older were in less accidents than many younger groups because retired folks drive far fewer miles. State Farm will reduce premiums for anyone driving less than 7,500 miles per year with discounts reaching as high as 50 percent.
Cashman admits that the loyalty discount could be one of the most significant on your policy. At State Farm, discounts increase every year you're a client, maxing out at seven years. (Other insurers may have different timelines.) Some will maintain your loyalty discount if you leave and come back within a year. This allows you to try out other insurers risk free to see if you're truly getting the best price. In addition, loyalty discounts occur independent of your age, driving record, annual mileage, and other factors.
New technological innovations like 360-degree camera systems, automatic breaking, and blind spot warning systems have all been instrumental in reducing the number of accidents. Purchasing a newer car with more safety features and a higher overall safety rating can result in a premium up to 40 percent lower. Cashman suggests contacting your agent for premium estimates on new cars you're considering to see which one gives you the best premium before you buy.
Online courses designed to teach defensive driving skills are offered by groups like the National Safety Council, and many insurers will reward you for taking them by discounting your premium. In fact, certain states make these discounts mandatory. Requirements will vary from state to state. For example, GEICO offers California drivers age 50 and up a five percent discount for completing a course, while New Yorkers of any age can get ten percent off. State Farm's own Steer Clear course could net you a 15 percent reduction.
Reduce the cost of your gasoline with a 'gas card'. You can compare them here.
Most insurers offer discounts to full time high school and college students for maintaining at least a B average, making the dean's list, or ranking in the top 20 percent of their class. Allstate rewards academic excellence with a 20 percent rate reduction, while State Farm goes as high as 25. Age restrictions may apply, and State Farm defines "full time" as 12 or more units, according to Cashman. The idea, though, behind the discount is that responsible students are also typically responsible drivers.
According to DMV.org, drivers who are employed in what insurers consider "low risk professions" can sometimes be eligible for a reduction in premiums. Examples include scientists, teachers, nurses, pilots, engineers, first responders, and certified public accountants. Statistics have shown that people engaged in these professions are involved in far fewer accidents while driving their personal vehicles than the national average. Ultimately, your insurer will decide which occupations qualify and for how much.
Take the Next Step:
- Make sure you are not overpaying for auto insurance. See how much you could save with just a few clicks. Fast, free quotes and online comparisons.
- Want to pay off your car faster? Consider refinancing into a lower auto rate.
- Stop struggling to get ahead financially. Subscribe to our free weekly Surviving Tough Times newsletter aimed at helping you 'live better...for less'. Each issue features great ways to help you stretch your dollars and make the most of your resources. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist And What You Can Do About It for FREE!
Share your thoughts about this article with the editor.