Multi-car

To encourage you to insure all of your vehicles in one place, auto insurance companies offer a percentage discount off each car that is placed on the same policy. This saves you money over buying a policy for each vehicle. Plus, you don’t have to worry about keeping track of premium payments on more than one contract. It works in the insurer’s favor too by not having to send out notices on more than one policy per customer. It’s a win-win for all involved.

Multi-driver

In the old days, companies assigned each driver in the household listed on the policy to a specific vehicle. The agent would state on the application for insurance which car belonged to which driver, and the company would charge just for that unit based on the assigned driver’s risks. The parents usually drove the newer, nicer cars and would purchase older, less expensive ones for their teenage children to learn with. If that old jalopy got smashed, they wouldn’t be out of too much money.

Now, insurance companies no longer assign vehicles because too often a claim would occur in which an unassigned younger driver would crash in the brand-new car allotted to a parent. To solve this problem, insurers invented a mathematical system called household averaging. I’ll admit it’s a little complicated, but essentially this means they average out the potential risk of all the drivers in the house and assign that factor to each car. No longer does a parent have to worry about whether an accident will be covered if an inexperienced driver crashes Mom’s new Mercedes.

If there are more similar cars than drivers, the insurance company will assume the policyholder might hide an unauthorized driver in the house and fail to list them on the policy. The multi-driver discount would be eliminated or reduced. The discount would increase when the policyholder names as many drivers as cars; that way, the insurance company knows more about the risk it is dealing with. When the number of drivers listed exceeds the number of cars, the company assumes that one car might be used a little more frequently than is normal, and the discount may level off.

Although the discount can be as much as 10%, the only proper way to know how much you can save will be to disclose to your agent everyone of driving age who lives in the house.

Prior Insurance

This auto insurance discount is probably the biggest one of all, in the 25% range. This means that if you switch insurance at the renewal of your existing contract and can prove that you have maintained your policy in force for at least six months, the new insurance company will entice you to move over by giving you a huge discount. However, if your policy expires or you change in the middle of your policy and have even one day lapse, the amount of the discount might be reduced to as little as 10%. Once your policy has been canceled for over 30 days, the offering company will withdraw the discount completely, and you will pay their full base price.

Multi-policy

The most common way insurance companies advertise this discount is by using the term “bundle.” You hear the commercials everywhere. “Bundle and save!” Don’t get too excited; the savings of the bundled policies is around the 5% range. Getting you to place more than one policy with the same insurance company is a clever way for them to keep you locked in. If they only insure your auto, but not your boat, home, motorcycle, or recreational vehicle, the other agent will always be encouraging you to switch your auto insurance over.

It’s true, you might get the best deal overall by having your policies all with the same company, but the bottom line is, you should insure each asset you have with the right kind of insurance, with the right coverages, regardless of how much you might save by bundling. Look at the bigger picture and choose between plans based on the best coverage for your needs, even if it means splitting up the policies among various companies. An independent agent can help you decide which way makes sense for you.

Good Student Discount

This discount can make a tremendous difference for households with young drivers. If a listed secondary driver with a valid license or permit, under the age of 21, is in school, whether it be high school or college, and maintains a B average or better, they could qualify for a substantial discount. This could mean hundreds of dollars in savings for the policyholder. The insurance company will want proof. The student can easily log in to the school’s website and download the most recent grade report. Most companies will apply the discount as long as the most recent grade point average (GPA) is higher than 3.0 or the accumulated average exceeds that amount. So, the student could have a bad semester, but might have an overall B average and still qualify.

Good Credit

This discount is still hard to quantify. It’s not really a discount or rather an underwriting and pricing factor that is hidden behind the scenes. Neither you, the client, nor your agent will really know just how your consumer credit will either hurt or help you.

I know people who have a great credit score but have no recent purchases on credit, and so insurers will penalize the prospective client with higher rates. Other drivers are maxed out credit wise to the neck in debt, and in a single month run the danger of their credit score going down the drain if they were to lose their job, but they get a great good credit discount because there is plenty of on-time payment history. Like the prior insurance discount, the good credit discount can have an impact on the price of insurance by as much as half the base price.

Claim Free

This discount is how auto insurance companies reward drivers for not only keeping a clean at-fault accident record but for avoiding accidents caused by others as well. It’s true, some people can have a string of bad luck and get hit by other drivers, while others can go their entire life without a single claim.

Clients often call me to complain about an increase in the price of their insurance at the next renewal after an accident that wasn’t their fault. The removal of this discount would be the reason why. Is it fair? Probably not. But your insurance company has to recover its costs for helping you settle your claim with the other party or their insurer.

The look-back period for this discount is usually around five years. So, if you can make it five years without a claim or accident, at-fault or not, you will look forward to reinstating this discount on your policy.

Advanced quote

Suppose you are shopping around for insurance and wait until the very last day before your current policy ends, and you find a cheaper company and make the switch. What you may not have known is that if you had shopped a little earlier, say, a week before your policy expired, you could have gotten the new policy for about 3% cheaper.

Companies reward shoppers with discounts for quoting early. This shows them you are responsible with your finances and is a good indicator that you will pay on time and cooperate should a claim occur. Companies usually send out renewal offers about 30 days before the expiration date. That is the best time to call your agent to review the policy for coverage and price, or to shop around for better deals. Don’t wait until the very end and expect to get the best premiums.

Paperless

You can get a small 1% to 2% discount if you agree to have your policy documents sent to you via email or available for download online if you create an account on the insurance company’s website.

Pros: You aren’t clogging up your mailbox with paper that might get lost by the post office or stolen by some jerk walking through your neighborhood. This also avoids potential identity theft should someone get hold of an envelope with your declaration page inside. To be fair, most insurance companies are now blanking out or leaving off potentially damaging information like Social Security numbers, dates of birth, and driver’s license numbers.

Cons: Your email inbox might fill up with more than just critical notices from the insurance company. Once you give your insurer your email address, they will send you all kinds of offers and insurance tips meant to keep you engaged. After a while, some email servers will see all that communication as spam and send the really important notices, like cancelations and payments, to the junk folder.

If you aren’t good at checking and managing your email frequently, including your spam folder, you might want to stick with the old-fashioned postal service.

Paid-in-full

Not everyone can afford to pay the six or twelve month premium for their car insurance all at once. Often the policyholder is struggling just to pay the basic monthly payment. But if you are good at budgeting, you can save a ton of money by paying the premium in a single installment at the time of renewal. You end up saving the equivalent of about one month’s worth of premium. Paying in full also helps your insurance credit score, which makes you a more desirable and responsible risk to other insurers should you ever go shopping for insurance.

Automatic withdrawal

Adding the automatic payment function to your policy if you can’t afford to pay your premium in full is a great way to save a little money. Most companies reward you with a $5 to $10 monthly discount for agreeing to have your premiums deducted electronically.

Pros: You never have to worry about remembering to pay your premium on time and save the time and money for having to mail your payment or go online every month to enter your card information.

Cons: If you forget to put money in the account and the funds are unavailable on the morning the withdrawal is made, the insurer will charge hefty non-sufficient funds fees and late fees should the transaction fail.

Experience discount

A seasoned driver with three or more years of driving experience will pay less than one of the same age and gender with less than one year. As part of the quoting process, a company will order a driving report from the Oregon DMV. The record will show the “first licensed date.” That will tell the company how long the driver has had their license. The system will then calculate the experience discount based on the time since that date. The charge for being a new driver can be as much as 20%, regardless of the driver’s age.

Car safety features

Discounts for certain safety features such as daytime running lights and lane warning systems used to apply based on the word of the agent as they were optional features. Now, most cars have standard safety components, and the quoting system will know which ones your car has based on the vehicle’s identification number (VIN). That might be the reason a quote for one vehicle could differ from another of the same year, make, and model.

Senior safety course

Once a driver reaches a certain age, say 55, a company may reward the senior driver with a small discount if the agent can submit a certificate upon completion of a driving safety course. Search your community for classes. Senior centers, libraries, or travel associations often offer them. Some offer the course for free, while others charge a small fee. Either way, the discount is not that great: maybe 1% or 2%. Find out how much the class costs, then call your agent to find out how much you save. Beyond the cost, it’s important to keep up with the latest traffic laws. A refresher course might just save you a ticket or help you avoid an accident.

These are just a few of the discounts a company might offer. They might have more or be listed under a slightly different name. Ask your agent when you are getting quotes for auto insurance which ones you qualify for.