What are the most common auto insurance discounts?

November 11, 2020

Learn about the most common auto insurance discounts and how they can help you save money

A woman shopping for auto insurance, looking at the most common auto insurance discounts

Saving money is at the forefront of our minds these days. We look for places to trim and cut back wherever possible, and that often means making hard decisions. Of course, there are certain things that many of us can't go without - like a vehicle and auto insurance to protect it. But just because these things are a necessity doesn't mean we can't find ways to reduce the cash we spend on them. That's why it's important to consider every possible discount when shopping for auto insurance - but which ones should you remember to look for? Today, we'll take a look at the most common auto insurance discounts to help you save the most on your policy.

Common auto insurance discounts

When it comes to saving money on your auto insurance premium, there are a number of different discounts that auto insurance providers may offer. While the availability, amount, and specific details of each discount will vary from company to company, the following are some of the most common auto insurance discounts to be on the lookout for. 

Multi-car discount

Whether you personally own a number of vehicles, or have several in your family's household, many auto insurance companies will offer discounts when you insure multiple vehicles with the same provider. 

You may hear this referred to "multi-car discount", a "multi-policy discount", or possibly a "family plan discount." In any case, these are considered a type of "bundle" discount as you are receiving a discount for having multiple policies with the same insurance provider. 

Apart from the savings, having all of your vehicles insured by the same company can often make it easier to keep track of payments as you won't have to deal with multiple websites, managing passwords for multiple logins, and multiple bills. 

Companion policy discount

A "companion policy discount" is another type of multi-policy discount, or bundle discount. Most insurance companies that sell auto insurance also sell other types of insurance, such as home or property insurance. For this reason, they may offer you a discounted rate on your auto policy premium if you bundle it with one of their other products like the ones mentioned above. 

So, if you own a home and already need to have an insurance policy to cover it, it's worth speaking to your insurance agent about potentially bundling both your home and auto policies to qualify for a discount and the savings that come with it. 

Homeownership discount

Speaking of homeownership, if you own a house, or in some cases a rental space, townhouse, condominium, or a mobile home, your provider may offer a discount on your auto insurance. To be clear, this is separate from a companion policy or bundle discount - you don't necessarily have to have your home insured with the same company to qualify. In fact, this discount typically doesn't extend to policyholders who have a companion policy discount or otherwise get a discount for bundling their home insurance. In other words, this discount will likely only be available if you own a home, but don't insure it with the same company.

New car discount

New cars are often more expensive than older or used cars, and often cost more to insure. However, new cars usually have fewer miles, less wear, better safety features, and are generally less likely to have a mechanical malfunction that results in an accident. For this reason, many providers offer discounts to customers that seek to insure a new car they have recently purchased. 

It's important to keep in mind that the definition of "new car" may vary from place to place, however. For example, some companies offer the discount only if you are the first title owner of the vehicle. Other requirements may state that the car has to be less than three years old.

Academic achievement discount

As any parent knows, purchasing insurance for your child or young driver can be a little pricey. Even after a teenager gets their learner's permit or official driver's license, they are still new to the process of driving, which makes the likelihood of accidents greater. Fortunately, most auto insurance companies offer a way for parents to save on their insurance.

For those of us who are no longer students, we may remember a time when we could show a good report card to the local pizza shop for a free personal pan pizza. Some may have even had an allowance bonus when they brought home a stellar report card. In any case, rewarding a student for their academic performance is fairly common, and is the basis for the "academic achievement discounts," or "good student discounts," that auto insurers often offer. 

The idea is fairly simple, but of course, the specifics vary based on the insurance provider. In general, though, you may be able to get a discount for providing proof that a covered student is doing well in school. This may be restricted to people under 25, but it can apply to both high school students and college students, assuming they are enrolled full-time and meet the grade requirements outlined by the insurer.  

Advanced quote discount

When do you normally decide whether you're going to renew your current auto policy or shop for a new one? If you start shopping in ahead of time, many insurers will give you a discount if you get your quote in advance of that date, which is known as an "advance quote discount" or an "advance purchase discount." 

Let's say that you know your policy expires in a month, and you've decided to shop around for a new provider. If you request a quote at least seven days ahead of the effective start date for your new policy (i.e. the date your current policy ends and your new one needs to begin to avoid a lapse in coverage), you could qualify for the discount.

Claims free discount

A "claims free discount," also sometimes referred to as an "accident free discount," is exactly what it sounds like.  

Similar to claims free discounts you may find with other insurance products, an insurance company looks back into your history (usually three years) to see if you have had filed a claim in that period. If you have no claims filed within that three year period, you'll typically qualify. Usually, this discount will continue to apply after each renewal as long as no new claims are filed.

When inquiring about this discount, it's important to know what an insurance company considers an "auto claim" in your history. While there are claims that obviously count towards this, some smaller claims may not (like a claim payment under $500 for example). For this reason, it's important to speak to your agent about this discount to understand the specifics.

Welcome discount

A "welcome discount" may be the simplest to understand. Basically, if you're a new customer - you could qualify for a discount! Depending on your current provider, this incentive alone may make switching worth it.

The length of time that a welcome discount lasts will certainly vary. For example, some insurers may only apply the reduction for the first year, and others may extend it for a longer period of time, like 3 years. If you are shopping for auto insurance, and you ask an agent about a welcome discount, be sure to ask them how long it lasts!

Paid in full discount

Some insurance companies provide a discount if you choose to pay all of your policy premium in advance. This can be a great discount for those that have the opportunity to take advantage of it. Not only will you save a percentage of your premium, you won't have to worry about remembering to make payments or deal with monthly statements. 

Depending on the carrier and your policy, this might mean paying the 6-month or annual premium up front. 

Mature driver discount

Sometimes referred to as a "senior driver discount," insurance companies may have savings in store for policyholders in their later years. The exact age an individual must be in order to qualify can vary between providers, but may be available as soon as age 50. 

Other possible auto insurance discounts

Apart from the discounts listed above, you may find a number of other discount options available with your auto insurance provider. 

Loyalty/renewal discount. Depending on how many years you have been with a particular provider, you may qualify for a discount upon renewal of your policy. This usually starts off at a smaller percentage and grows each year until it reaches a maximum. 

Auto safety discount. Most insurance providers will offer discounts for certain safety features in a vehicle, such anti-lock brakes and passive restraints (seatbelts).

Anti-theft discount. Auto insurance companies want to prevent auto theft just as much as you do, and they'll often incentivize you to do so with this discount. If you have an approved anti-theft system installed on your vehicle, you may qualify for a discount. 

Driver education discount. While many people opt to take defensive driving to avoid a traffic ticket, you may be able to take such a class in order to get a discount on your auto insurance premium. Additionally, some providers will do the same for approved driver training courses and drug and alcohol driver awareness training classes. 

Again, it's important to remember that the specific discounts, percentage amounts, and qualifications will vary from provider to provider. Furthermore, while a specific insurance provider may have multiple discounts you could qualify for, the way that they are (or are not) combined may be more complicated than simply adding together the percentages. In order to get a complete understanding of the specific details for any discount or series of discounts that a carrier provides, make sure to speak to your insurance agent. 
A toy truck in a basket with cash, representing auto insurance discount savings.

With a number of auto insurance discounts, Germania offers Texans a variety of ways to save on their auto insurance policy. 

For more information about our insurance products, request a free quote online, or reach out to one of our trusted agents today!

Read more: When shopping for auto insurance, an NPS rating can help you pick a quality company. But what is an NPS rating, exactly? Read our blog to learn everything you need to know!

by Geoff Ullrich

About the Author

Geoff Ullrich is a writer and Content Marketing Strategist at Germania Insurance.

What do you want to read more about? For suggestions, questions, or content-related inquiries, contact us at content@germaniainsurance.com!

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