On average, car insurance in the U.S. costs drivers $1,771 annually, or $148 monthly. Insurers determine the cost by looking at your age, gender, the make and model of the car you drive, age, and driving record. If these factors indicate you’re at higher risk than other drivers, you’re likely paying much more than the average.
Fortunately, many methods of getting a discount on payments are available to you.
Most people know they can get discounts by:
- Taking a defensive driving course
- Installing anti-theft devices in your car
- Installing safety equipment in your car
- Establishing a long-term record with one insurance carrier (having a policy with them for roughly three years or more)
- Documenting a history without accidents
- Having a good to excellent credit history
But many ways to receive a discount on your car insurance aren’t widely known. These are a kind of hidden cost-cutting underground! Here are 12 secret discounts that can reduce your car insurance payments from our car accident lawyers at Finkelstein & Partners.
Good student discount
Students in high school or college can save on their car insurance by maintaining at least a B average. Many carriers also require the students to be between 16 and 24. The average savings range from 8 percent to 25 percent.
Low annual mileage discount
You may receive a discount if you drive fewer miles than the average car driver. The definition of low annual mileage varies depending upon your insurance carrier but ranges from 7,500 to 15,000 miles annually. If your office has shifted to work from home status, you’re retired, or you’re a student who drives infrequently—or you don’t drive much for any other reason—ask your carrier about a discount.
Car insurance premiums are determined, more than any other factor, by risk. Statistics show that married couples get into fewer accidents than single folks do. As a result, married people pay from 4 percent to 10 percent less on car insurance.
Higher education discount
Higher education makes a big difference in car insurance rates. The average car insurance payment for a driver with a high school diploma is nearly $6,000, far more than the average for someone with a bachelor’s degree. One potential reason is that younger people, in their teens and early 20s, get into more accidents than people outside of that age group and, as a result, pay higher premiums than older people. If you’re still in your teens, you’re not likely to have a B.A.! But whatever drives the statistics, the lesson is clear: if you have one or more college degrees, you’re likely to pay less in insurance premiums.
Membership in associations and groups can significantly affect your car insurance, reducing them by about 10 percent to 15 percent. What kind of groups? Many, including well-known national ones like the American Automobile Association (AAA) and the American Association of Retired Persons (AARP).
Many professional associations, such as the American Library Association (ALA), confer discounts to members. So do some alumni associations, fraternities and sororities, credit unions, and other associations and memberships. If you belong to something and are in doubt, ask your insurance carrier!
Alternative energy discount
The use of electric cars is growing. If you drive an electric vehicle, a hybrid, or one that uses alternative fuels, an increasing number of insurance carriers will give you a discount on that car’s insurance policy. Some insurance companies also discount drivers who rent or lease an electric or alternative energy vehicle.
If you own your own home, you could get a discount. That’s true even if you don’t get the same company’s homeowners insurance.
Farm vehicle use discount
Using your car primarily on the farm makes you eligible for a discount with many carriers. Why? A vehicle driven around a farm is unlikely to run into traffic that would cause an accident!
In addition to the above methods, which insurance company you choose, what policies you buy, and how you pay them can significantly affect your costs.
One of the simplest and most convenient methods of reducing car insurance costs is having the same carrier take care of all or most of your insurance needs. For example, if you have car and homeowners (or renter’s) insurance, buying both policies with the same insurer can save you from 6 percent to 26 percent on premium costs. Don’t overlook bundling all your policies to save on car insurance, such as boat insurance, motorcycle insurance—any insurance you have.
Paying in full
Insurance carriers will give you a discount if you pay in full (by year, half-year, or quarter) rather than monthly. The discounts range from 6 percent to 14 percent. These discounts don’t stem from your risk category or driving behavior but from cost savings to the insurer itself. It costs them more if they have to bill you and process payments every month.
Conducting business online
Similarly, insurers have fewer costs if you conduct business with them online. If you sign up to go paperless, they don’t have to send you paper bills or paper policy renewals and save on paper, postage, and labor. If you renew, pay, and conduct any other car insurance business through a phone or computer, you’re helping them save on costs. As a result, many carriers offer a discount for going paperless, paying, and renewing online.
Advance purchase of car insurance
Surprisingly, many insurers will also offer a discount if you renew your policy early and pay it. This differs from paying in full; it’s paying early before your existing policy expires. Most insurers who offer this discount want you to renew from one to two weeks before the expiration date. Discounts range from 2 percent to 15 percent.
Frequently Asked Questions
Can I get a discount based on where I work?
It’s possible! Insurer carriers often offer discounts to employers, such as the military, Federal and state agencies, school districts, universities, and so on. The best thing to do is to ask your employer or call your insurance carrier.
If your employer offers membership opportunities to certain credit unions or membership organizations, they can also offer discounts on car insurance. It pays to look into every avenue.
Is there anything else I can do to reduce my car insurance costs?
Knowledge is power. Insurers base car insurance rates on the make and model of the car, your age, your gender, your car’s age, the number of miles driven, and so on. Some factors are beyond your control (like age and gender), but many are within your control.
If you can reduce the miles you drive by taking public transportation or working from home, check with your insurance carrier to see if it would lower your rates.
Suppose you’re driving an expensive sports car or a car with higher than average repair costs, for example. In that case, your insurance costs may increase, too, simply because insurers keep tabs on how often vehicles (by make and model) are in accidents and how much they have to pay out in claims for each make and model.
If you’re in the market to purchase a car, research the cost to repair the cars you’re interested in and the cost to insure. There can be a big difference between a workday car like a Honda or Ford and a Ferrari.
The insurance costs can also decrease if you reduce coverage or get a larger deductible. Most states mandate a minimum coverage, but if you’re carrying more than the minimum, you may be paying more than you need to. The deductible you pay out of pocket in an insurance claim to your carrier. Most insurance policies allow you to choose. If your deductible is currently $100 or $500, your costs may decrease if you raise the deductible. Be sure to check with your carrier.
Finally, be a savvy shopper for insurance, just as you would be for everything else. Prices can vary from insurer to insurer. Get car insurance price quotes from at least three carriers to see what your costs would be.
Why does my son pay much more in insurance than my daughter?
Insurance companies pay keen attention to overall driving records by factors such as age and gender (and many other factors). Statistics from the U.S. Department of Transportation’s Fatality Analysis Reporting System (FARS) are analyzed periodically by the Insurance Institute for Highway Safety (IIHS).
The most recent statistics show that male drivers accounted for more than 70 percent of deaths in passenger vehicle accidents, while female drivers accounted for less than 30 percent. As a result, insurers will charge more for insurance premiums for male drivers because there is a higher probability of paying out an insurance claim.
Similarly, younger drivers are more likely to cause an accident for various reasons, including inexperience in driving, inexperienced judgment, and other factors. Men under 25 pay the highest premiums.
That isn’t to say that an individual isn’t a perfectly prudent driver, of course, but insurance companies look at aggregates. The discounts mentioned here can reduce individual policy costs.
What kind of anti-theft devices and safety devices lowers insurance costs?
Insurance companies will give you a discount for anti-theft and safety devices installed in the car. If someone steals your vehicle, you may have to pay a claim, which costs the insurer money. If you hinder or stop the theft of your car through security devices, you get a discount!
Among the devices that can help you receive a discount are the following.
- Car alarms – Audio devices sound off when thieves tamper with the car. Simple and effective for the most part
- Ignition kill switches – As the name implies, these don’t allow the car to start. These are one of the least expensive devices to install.
- Steering wheel locks – These lock the steering wheel so thieves can’t drive the car.
- Armored collars – These protect the car’s wiring around the steering column. Result: Thieves can’t hotwire your car.
- Floorboard locks – Are placed on the floorboard and will make both brake and gas pedals non-functional, so thieves can’t drive the car.
- Hood locks – Lock the car’s hood and prevent opening, so a thief can’t get to the security system to disable the battery.
- Tire locks are similar to boots placed on cars with excessive parking tickets, making the vehicle impossible to drive. Unlike other methods, thieves can see them before entering the car, which can deter theft.
In addition, some devices that make the cars easier to trace will earn you a discount.
- Vehicle tracking system – These are similar to GPS systems. One significant difference: They automatically alert the police or other law enforcement, who can trace them.
- Window etching – This etches the Vehicle Identification Number (VIN) on the window. VINS are usually in a less visible place than a window. This visual deterrent makes cars easier to trace and the VIN harder to remove.
Insurance companies also offer discounts for safety devices such as conventional GPS, airbags, and rear-view cameras. If you do not currently have these, check with your insurance carrier about potential discounts vis-à-vis the installation cost.
Mr. Finkelstein is the Managing Partner of Finkelstein & Partners, LLP. He has become a noted consumer activist through his representation of injured individuals against corporate wrongdoers and irresponsible parties.
An accomplished litigator, Mr. Finkelstein has represented Plaintiffs in wrongful death and catastrophic personal injury cases. He has successfully handled dozens of multi-million dollar cases.