Car insurance discounts: How to maximize your auto policy savings

Inflation and rising costs have taken a toll on consumers in recent years. One area where Americans are especially feeling the pinch is the cost of car insurance, with premiums increasing 18.6% from July 2023 to July 2024, according to the U.S. Bureau of Labor Statistics.

But you can lower the cost of coverage by taking advantage of auto insurance discounts, many of which go unclaimed or underutilized by policyholders. Good driver discounts, low-mileage discounts, multi-policy discounts, and other programs can save 10% or more on your policy.

Below, you’ll find our guide to some of the common car insurance discounts you might qualify for, how much they could save you and how to get them.

Key highlights

• Check out common discounts, such as multi-policy and safe driving programs, as well as less familiar ones, including alumni association and education/occupational discounts.
• Call your insurance agent and ask what changes you may need to make – installing a telematics device, taking a defensive driving course – to get the discounts you want.
• Think a couple of moves ahead. If you’re asking an agent about whether your high-schoolers qualify for good student discounts, ask if they’d also be eligible for distant-student discounts if they attend college out of state.

How much can car insurance discounts save you?

The property and casualty insurance business in the words of consulting, tax and audit firm Deloitte, is “intensely competitive.” The good news is that continued healthy competition among insurers means you stand to seriously benefit as companies fight for your business.

“Car insurance is the most competitive insurance product in the U.S. Insurers want to grow their market share and offering a wide array of discounts is how they generate new business and retain existing customers,” says Mark Friedlander, director of corporate communications for the Insurance Information Institute (Triple-I). “Obtaining a variety of discounts could generate savings of 40% or more off your total premium cost.”

There are scores of discounts available and it’s easy for drivers to overlook and miss out on valuable programs, including alumni association and education/occupational discounts, that can add up to big bucks.

“While consumers are familiar with many of the common discounts like bundling home and auto insurance, there are many other discounts that are unique to each insurance provider,” says Ted Olsen, vice president at Goosehead Insurance.

10 popular car insurance discounts

Insurers offer a variety of programs, including these common, and not-so-common, auto insurance discounts, including:

• Safe driver discounts
• Multi-policy/bundling discounts
• Good student discounts
• Anti-theft device discounts
• Low mileage discounts
• Military discounts
• Paperless billing discounts
• Pay-in-full discounts
• Early signing discounts
• Telematics discounts

Common Discounts

Safe driver discount

These discounts are a reward for good drivers. Usually, eligibility for this discount — up to 10% to 25% — requires that you maintain a clean driving record, defined as having no at-fault accidents or moving violations, for three to five years. Additionally, numerous insurers extend a discount to those who have completed a state-certified defensive driving course.

Multi-policy/bundling discounts

These discounts are for people who have more than one policy with the same insurer.

“Bundling more than one policy with the same insurer, such as auto and home. auto and renters, or auto and condo coverage, can generate savings up to 20% on either or both policies,” says Friedlander.

Bundling policies is beneficial to consumers and insurance agents alike.

“For consumers, it creates one central point of contact and simplifies the process of maintaining your home and auto insurance,” Olsen says. “Lots of insurance companies will also offer extra perks to clients who bundle their home and auto policies under one carrier, such as single deductible claims or options to choose lower deductibles.”

Good student discounts

Have a bright high schooler or college student in the family? These discounts are available to full-time students who maintain a B average or higher. We found the typical discount is 5% to 15%.

Distant student discounts

These discounts are available to families with a child away at school. If your student lives at least 100 miles from home and doesn’t have a vehicle on campus, you can get a 5% to 10% discount.

Anti-theft device discounts

These discounts are available to car owners with anti-theft devices or vehicle recovery systems. Whether you use a steering wheel lock, kill switch, brake locks or another anti-theft mechanism, doing so can yield 5% to 15% off the comprehensive portion of your auto insurance policy.

Telematics/usage-based insurance discount

Telematics, also called usage-based insurance, determines a discount by assessing your specific driving patterns and behaviors.

“You must agree to have your driving habits tracked by your insurer’s mobile app or plug-in device to qualify for this discount,” Friedlander says. “This includes allowing your insurer to track the time of day you drive, how far you drive, braking and acceleration patterns and whether you engage in distracted driving behaviors. The average savings can range from 5% to 30%. However, it’s important to note that some insurers can raise your rates if their telematics detects poor driving practices.”

Multi-vehicle discounts

This discount is offered to policyholders who insure more than one vehicle with the same company. We found these discounts are usually between 5% to 25%.

“Insurers typically have a limit of including no more than five vehicles on one policy, however,” Friedlander says.

Specialized discounts

Low mileage discounts

These discounts are available to people who don’t often get behind the wheel. Drive 7,500 miles or fewer per year? You might qualify for a low-mileage perk and shave 5% to 10% off your premium.

Military discounts

These discounts, which can reduce rates by 10% to 20%, are available if you are an active-duty military member, reservist or military veteran.

Senior discounts

There are no specific discounts for being an older driver. But a senior driver training discount is typically available to people 55 or older who complete an approved accident-prevention class, such as the AARP defensive driving course.

“[M]any insurers allow older drivers age 50-plus to participate in a certified defensive driving program, which could generate a discount of 5% to 10%,” Friedlander says.

Julie Jakubek, an Allstate agency owner in Phoenix, says experienced drivers can benefit in another way.

“Those over 55 and retired are no longer commuting to work, which means they drive fewer miles. That can trigger a discount of up to 25% on some policies,” she says.

Alumni discounts

These discounts are offered by insurers to alumni association members.

“Many college alumni associations have negotiated rates with a specific car insurer,” says Friedlander. “Typical group discounts here range from 5% to 10% off standard rates.”

Lesser-known discounts

The potential for savings doesn’t stop there, however. Take a closer look at these often lesser-utilized car insurance discounts.

Paperless billing discounts

Policyholders who opt for digital communication from their insurer instead of receiving paper copies via traditional mail may qualify for a discount ranging from 5% to 10%.

Pay-in-full discounts

If you simply pay your premium in full versus monthly or quarterly installments you may receive a 5% to 10% discount.

Early signing discounts

If you secure new coverage before your current policy expires you could automatically generate savings of 5% to 10%.

Homeowner discounts

This discount is offered to those who own a home. Some car insurers offer a 5% to 10% discount for homeowners, even if it does not insure your residence.

Loyalty discounts

This discount is for drivers who stay with their insurer. If you’ve been a customer with the same carrier for five to 10 years, a 5% to 10% price cut could be yours to claim.

Education/occupational discounts

These discounts are offered to graduates, such as those from college undergraduate or master’s programs, Olsen says, and certain workers, such as scientists, lawyers, doctors, firefighters, engineers, law enforcement agents and teachers. These discounts can range from 10% to 13%.

“They may also discount your policy if you work in an occupation your carrier deems is at lower risk for claims,” Olsen says.

Step to take to qualify for and claim discounts

Now that you’re aware of all the various price cut opportunities available, it’s time to find out if you’re eligible and get these rate reductions.

Contact an agent

Take time to contact your insurance company or agent and ask questions.

“Inquire about any discount you’re interested in, ask if you qualify and make sure your agent updates your policy to include everything you qualify for so you can get the full benefit of reducing your premium,” Friedlander says.

Maximize your discount potential

It’s smart to explore strategies to maximize your savings so that you capitalize on every discount possible.

“Work with your insurance agent to identify all discount opportunities and determine what reductions you qualify for or what changes you can make to qualify for as many discounts as possible,” Friedlander says.

Combining discounts for maximum savings

Leave no stone unturned when talking with your agent.

For example, if you have a daughter who qualifies for a good student discount, think ahead and ask if she’s also eligible for a distant student discount for attending an out-of-state college. Or, if you have homeowners insurance with another carrier, get a quote from the company insuring your car. Perhaps you can switch to this carrier and qualify for a bundling discount.

Annual review: Keeping your discounts up-to-date

Olsen says it’s crucial to check in with your insurance agent at least once a year—ideally just before your policy renews.

“At that time, your agent can review your policy with you to determine if you qualify for any additional discounts, as well as inform you of any new market discounts,” he says.

Navigating discounts with top insurance providers

Different carriers provide different discount programs and discount amounts, which is why it pays to shop around and compare coverages, costs and discounts among several different insurers.

To illustrate how discount levels can vary, consider how these popular insurers reward safe drivers:

• Geico: Offers a good driver discount of up to 22% for being accident-free for five years.
• Nationwide: Safe drivers with a record of at least five years may be eligible for discounts, and the SmartRide program allows for potential savings of up to 40%.
• Progressive: Its Snapshot program offers discounts for safe driving, with an average discount of $146 for enrolled drivers.
• State Farm: Offers up to a 30% discount for enrolling in Drive Safe & Save and agreeing to monitor driving behavior.
• USAA: Offers safe-driver discounts for maintaining a good driving record for over five years and potential savings of up to 30% through the USAA SafePilot program with driving monitoring. USAA, however, is only available to military families.

How to find the best car insurance deals

The bottom line on lowering your premium’s bottom line? Ask your insurance agent about all the discounts you are eligible for.

“If the price of your policy is still too high with the discounts applied, it may be time to shop for new coverage,” Friedlander says. “You can use price comparison consumer websites, shop directly on insurers’ sites or work with local agents. I suggest that you get at least three quotes to compare costs and check out national and regional auto insurers.”