Insurance 101 — Personal Discounts

Auto insurance discounts are divided into three categories: driver discounts, vehicle discounts, and policy discounts. Driver discounts are based on factors such as your driving history, student status, professional organizations, age, and how you use your car. Vehicle discounts, on the other hand, are based on vehicle features that reduce your accident risks. Finally, policy discounts involve factors that make your policy easier to write, such as having multiple vehicles on one policy.

Let’s take a closer look at the different types of driver discounts available.

Why are Discounts so Important?

Aside from having a good driver history and credit score, the best way to save auto insurance is to take advantage of discounts. Most auto insurance companies offer discounts when they realize you are eligible, but it’s also important to do research beforehand and make sure you are receiving the most discounts possible.

What Are The Best Discounts?

Not all discounts are created equal; some have a much greater effect on your premium than others. For instance, being a good/safe driver- which means you have no at-fault accidents or moving violations for 3–5 years- saves you up to 20%. This is because your past predicts your future, so years of no accidents in the past hopefully means years of no accidents in the future.

If you have a new driver on your policy, it’s important to take advantage of a key discount: the good student discount. If your new driver is in high school and have a 3.0 minimum GPA, they qualify for the Good Student Discount, which could take up to 10% off your premium. Because new drivers are high risk, and tend to increase your premium substantially, it is important to use this discount if you qualify for it.

How To Take Full Advantage Of These Discounts

In order to take full advantage of these savings, it is vital to shop around and compare how different companies treat each discount. For instance, some companies only offer a maximum discount of 25% in all, while others apply the discounts to different components of your auto insurance (comprehensive coverage vs personal injury policy). Furthermore, some insurance companies value discounts differently; for instance, State Farm offers a special discount to safe drivers under the age of 25, which is more significant savings than other insurance companies. These can change how effective your discounts are, so by getting quotes from many insurance companies, you guarantee the best deal out there.

Insurance 101 — Personal Discounts was originally published in Uncle Jon’s Insurance Hacker Tips on Medium, where people are continuing the conversation by highlighting and responding to this story.

Category: Insurance 101
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