The Top 3 Discounts that Make Lower Auto Insurance Premiums Possible

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Daniel Walker
Licensed Insurance Agent

UPDATED: Mar 11, 2020

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Things to Remember...

  • Every auto insurance provider offers car insurance discounts
  • On average, most households own most households own more than one car
  • The majority of car insurance providers offer a discount of 15 percent when you add an additional driver

The automobile insurance industry has a multitude of discounts they provide for new and existing customers, but these three top the list. More than likely, this is because they are the most attainable for all types of consumers, especially the multi-car discount.

The Bureau of Labor Statistics confirms the national average for vehicles per household is 1.9 percent, which means almost every couple owns their own car.

In reviewing this information, it only makes sense that the multi-car discount would be the most popular out of all of the discounts auto insurance companies offer.

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Multi-Car Discount


The multi-car discount is the number one way auto insurance companies lower your annual premium. However, it is also the one discount that confuses most consumers. Many believe that they can only qualify if the additional driver or drivers are family members.

This is far from the truth. To receive a multi-car discount, every driver need only have the same address, since the location is a primary factor in issuing rates.

You can list anyone on your car insurance policy that resides in the same home, even a roommate.

The majority of car insurance providers offer a discount of 15 percent when you add an additional driver and if they remain on the policy, pay their bill on time, and refrain from filing any claims, many will provide an additional 5 percent every year they renew.

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The Bundle Discount

The bundle discount is another extremely popular discount that many car insurance companies are offering to their customers.

Simply put, if you add your home insurance or any other type of coverage, like boat or Recreational Vehicle, also known as an RV to your current car insurance policy, you can receive as much as 25 percent off your annual premium.

Bundling is an excellent way to capitalize on more than just lower rates too. They help you manage your deductible amounts.

For example, if your homeowner’s insurance deductible has a $2,500 deductible and your vehicle has a $1,000 deductible and you need to file a claim for damages done to both due to an unforeseen event, most insurance companies will only charge one amount.

Of course, it is usually the higher amount, but you can see how this saves you money. If you kept your car insurance separate from your homeowner’s insurance, you would need to pay both deductibles.

Instead of paying $3,500, you are only required to pay $2,500. That is still a good amount of savings, on top of the percentage discount that is applied to your annual premium.

Bundling is also a great way to keep your finances in order. You only receive one bill each month and can make just one payment for both.

In addition, many customers who choose the bundle option tend to stay with their provider for a longer period of time.

If they decide to leave, they must look for a competitor who offers comparable rates, discounts, and deductible options.

Safe Driving Discount


The safe driving discount is a two-fold discount that applies to the driver’s habits behind the wheel as well as the safety features associated with their vehicle since safety features are an asset to avoiding collisions.

In fact, the National Highway Traffic Safety Administration sent a report to Congress explaining how technology plays a pivotal role in the number of reported accidents on an annual basis.

Fewer crashes, especially life-threatening collisions have been successfully decreased with the new onboard computers and detection devices that many vehicles are now equipped with, especially luxury models and SUVs.

If you qualify for the safe driving discount, you can save up to 30 percent on an annual basis. The process is simple. You contact your provider and request the reduction by agreeing to install a small device in your car.

They monitor your progress for approximately six months to determine your driving habits.

If, after the specified period ends and you have not been involved in any risky behavior, they apply the discount. Some may add the discount a little at a time and others may require you to complete the full term. It is always important to note that you must be an experienced driver with at least three years behind the wheel to qualify in most cases.

It is always important to note that you must be an experienced driver with at least three years behind the wheel to qualify in most cases.

Another way many car insurance companies are rewarding safe drivers is through their deductible.

Rather than applying a percentage discount for driving safely, they are taking a different approach. These auto insurance providers will decrease your deductible a certain amount each year that you refrain from filing an accident claim.

Over time, your deductible can reduce to zero, which means if the unlikely collision were to occur, you would not be responsible for any out-of-pocket expenses.

Other Ways to Lower Auto Insurance Premiums

In addition to the discount programs that all auto insurance providers offer, there are many other ways you can successfully lower your car insurance premiums.

Start with the level of coverage you have. Everyone must maintain the basic level of liability insurance this is the law in every state. But, do you really need comprehensive or collision?

Are you paying for full coverage on a vehicle that is well over five or six years old?

Habit can cause many consumers to overlook these questions and continue to pay for coverage they may not need.

This means you should change your old habits and adopt new habits, including reviewing your car insurance premium before you sign up for renewal.

If you need the facts regarding what your state requires, you can find the information by going to the Insurance Information Institute. This free resource provides information about your responsibility regarding car insurance, in accordance with state laws as well as your financial obligations.

Never drop coverage until you know what your state deems necessary.

This is especially true for those who do not own their vehicles. If your car is a lease or if you are making payments and a financial institution has the title, you may need to keep a specific level of coverage until they send you the ownership papers.

Once the car is yours, you may be able to make the changes.

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Verify Your Credit Score


Times are changing rapidly and more auto insurance companies are looking at individual credit histories as a way to determine risk. They want to make sure you are managing your finances correctly. If you recently increased your credit score by making positive changes to your lifestyle, they need to know.

You are entitled to receive an annual credit report every year, free of charge. Take advantage of this and retrieve yours right away. Study the details and if necessary, pair your credit report with your credit score.

A score over 700 reveals a lot, especially if your credit score was lower in the past.

If you can convince your auto insurance company that you are a good risk, you may see a significant decrease in your annual premium.

This is one of the best ways to be proactive with your finances and save money at the same time.

Considering they want low-risk customers, you will actually help reduce your rates and boost their customer-base simultaneously.

Comparison-Shopping is Always Recommended

While everyone has probably heard that comparison-shopping is one of the best ways to lower their auto insurance premiums, many may not know where to start. The truth is, it is not that difficult and takes very little time.

Start by gathering a list of reputable companies. Verify certain aspects of each, like how they rate by their customers in fields like, customer service, price, and overall value.

Check their offers on their websites and match them with what fits your needs. Solicit advice from your family or co-workers and friends to get a current and unbiased perspective.

When you speak to the representative, let them know you are interested in their products and see how well they respond. They should be eager to gain you as a customer, not nonchalant or standoffish.

You can tell a lot from a company by their sales team. Do not forget to mention your current auto insurance provider, if you have one and the reason you want to switch.

Before you make up your mind, give yourself enough time to really think each offer over. Never make a quick decision that will cost you in the end. The whole point of comparison-shopping is to get a better deal that is a great value.

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