Discounts on Auto Insurance and the Tips for Finding Them

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Key takeaways...
  • Drivers under 25 usually pay more for their insurance
  • Students can earn a good student discount by maintaining good grades
  • Taking a defensive driving course can also lower your monthly premium

Car insurance is required all over the country. Without it, you can get a ticket or have your car impounded. If you are in an accident without car insurance, you could be in even more trouble when you’re sued for damages.

Though it is a necessary expense, there are many ways to save on car insurance. One way is to see how many discounts you can qualify for.

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Billing and Payment Discounts

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No matter how much insurance coverage you have, what your deductibles are, or who your insurance company is, you can usually get a discount based on how you pay and even how you’re billed.

Many companies now offer paperless billing options. If you choose this option, you won’t receive a paper bill in the mail. Instead, you’ll get an email with your bill attached to it.

To encourage their customers to use this option, the companies often give you a discount on the premium if you choose to go with paperless billing.

You’ll just have to get used to paying the bill with only an email to remind you.

If you choose an automatic electronic deduction as a payment, you won’t have to worry about the bill at all.

Most companies also give you a discount if you pay your six-month premium in full rather than paying it in portions each month.

However, if you pay electronically, many companies will give you the discount even if you pay each month.  This is because electronic payments are cheaper for the company to handle.

Student Discounts

If you are under the age of 25 or if you have a young adult driver on your policy, you know how expensive car insurance can be for him.

Fortunately, there are ways to save money even with young drivers.

If you or the young adult make good grades, usually defined as getting “A”s and “B”s, then be sure to let the company know. You might have to submit a report card or school transcript, though this isn’t always required.

A good student discount can be worth as much as 5 percent to 15 percent off your premium.

Some companies will also give a discount if the teen driver has taken a driving safety course.

The National Highway Traffic Safety Administration has a Teen Driving Program designed to reduce teen accidents and deaths.

If you have a college student who is away at school without a car, be sure to tell your insurance company this. They can usually give you a great discount if the student has very limited access to a car.

Policy Discounts

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Sometimes you can get discounts depending on the type or number of policies you have.

For example, if you own more than one car, it is almost always cheaper to insure them on the same policy. This is because you can get a multi-car discount.

Nearly all car insurance companies also insure motorcycles, recreational vehicles, and even boats.

Another great discount is a multi-policy discount. If you own a home, try and find a company that offers homeowners insurance as well.

By getting your homeowners or renters insurance from the same company, you’ll get a discount on both the car insurance and homeowners.

If you don’t drive it much, you can ask for a low mileage discount.

This is especially good for people who use public transportation to go to work each day and only use their cars for occasional trips on the weekends.

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Safe Driving Discounts

If you haven’t had a ticket or been involved in an accident in the last three to five years, ask if you are eligible for a safe driving discount.

Do this for each driver on the policy.

You’ll usually get a break on the premium if you can show that you are a safe driver. Just be aware that if you do get a ticket or have an accident, you’re likely to lose this discount.

This is another great reason to take a defensive driving course to get a ticket off your record.

Not only will this keep you from losing your discount for having a ticket, but just taking the course can earn you an additional discount.

Keep Your Credit Score Up

If you have very good to excellent credit, ask if this can earn you a discount.

Many people don’t realize that insurance companies can and do take your credit scores into consideration when determining your premiums.

For more information, the Federal Trade Commission reports on how this works.

Discounts Based on the Car

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While these last discounts are based on the kind of driver you are, you can also get discounts based on how the car is equipped.

Specifically, insurance companies like vehicles that are both safe and hard to steal.

Not only are safer cars going to protect you and your family in an accident, they are going to protect your pocketbook as well.

Medical expenses can be far more costly than repairing a vehicle after an accident.

This is why car insurance companies give discounts on cars with advanced safety features, like airbags, anti-lock brakes, and crumple zones.

These features have been shown to reduce injuries. If you are looking for a safe car to buy, Safercar.gov lets you look at the safety ratings on any car you are considering.

Safety features aren’t the only things insurance companies like to see on cars. Car insurance companies also give discounts for vehicles that make the car harder to steal and easier to recover if it is stolen.

These days, this goes beyond an alarm system. An engine immobilizer does not allow the engine to run unless the key is in the ignition.

Look for features like this that can save your insurance company money if someone tries to steal your car, and you’ll save money too.

Other Ways to Save Money

Though these discounts are great and can really reduce your premium costs, finding discounts is just one way to save money on your premium.

Another way to lower your premium is to raise your deductible.

If you have comprehensive and collision on your cars, then you will have to pay the first part of any repair or new car purchase out of your own pocket.

This amount is called a deductible.

For example, if you rear-end someone and cause $2,000 damage to the front end of your car, you’ll have to pay your deductible to the repair shop before the insurance company will pay the remainder.

If your deductible is $250, you’ll have to pay that amount and the insurance company will pick up the remaining $1,750.

However, for deductibles that low, you’ll pay much more in premiums each month.

Consider raising your deductible to $500 or $1,000 to keep your premiums lower.

Then put the $1,000 in a savings account and don’t touch it unless you have an accident.

Perhaps the best tip you can follow to save money is to shop around, getting quotes from several different companies.

Thus, just getting one quote gives you no idea as to the lowest price you could be paying. Get quotes from a variety of sources–small local companies as well as large national ones.

Just make sure that you are getting quotes for the same levels of coverage with the same deductibles.

Also be sure to specify how much liability coverage you want on the quote. Many companies automatically give the state minimum levels in their quotes as this is the cheapest level of coverage.

Since these required amounts are usually very low, ask for the amount you want to get a better idea of what you’ll pay for the coverage you need.

For even more tips on saving money, read this article from the Insurance Information Institute.

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