The car insurance business is intensely competitive with most advertisements proclaiming a large array of discounts that can reduce the cost of the premium. However, surprisingly, at the time of actually buying the policy, few people bother to ask about which of the discounts they are eligible. Many of the discounts are for reasons that people might even think to be relevant such as getting married or getting good grades. As incredible as these offers sound, they can end up saving you hundreds of dollars every year on the premium amount. Typically, these discounts are based on your affiliations, the vehicle being insured, and the other insurance policies that you may have. A brief look at each of these:
Group insurance: Because large employers and association of various types offer a captive audience, many insurance companies prefer to work with them to offer concessional rates to prospective customers. Even if you are eligible for a discount from one of the car insurance companies, the reduced premium doesn’t need to be the best you can get in the competitive market. You should go ahead and shop around for better rates. You can often be surprised at some of the rates you get that are significantly lower than even the group insurance rates offered by your employer, credit union, alumni association, credit card membership, etc.
Accident-Free Discount: Insurance companies appreciate the fact that the insured has an accident-free record for a specified number of years and reward safe driving habits by giving them a discount.
Discount for undergoing a course on defensive driving: Defensive driving is a method of safe driving that also saves time and money. Several such courses are approved by the DMV of your state that you can undergo to be eligible for a discount on the car insurance premium. The National Safety Council offers defensive driving courses in 12 states. Be sure to check that the course you take has the approval of the state authorities. Click here to know more about defensive driving courses in your state.
Discount for good students: Some insurance companies offer discounts to student drivers under the age of 26 years. Some of these companies require the students to maintain a minimum grade to qualify.
Armed forces discount: Quite a few insurers offer handsome discounts for members of the armed forces, the Army Reserve, and the National Guard. They also allow a facility for keeping the policies suspended during the deployment period or give further discounts to make up for the period of non-use of the vehicle.
Vehicle characteristics: The make and model of the vehicle are perhaps the most important consideration for the insurance company for calculating the premium. Apart from the value of the vehicle, the premium is impacted by its safety record, the frequency of it being stolen, how expensive are the repairs, what safety equipment is installed, etc. As may be imagined sports cars that are normally driven aggressively are more expensive to insure than family sedans.
Anti-theft equipment: There are various types of anti-theft devices available that prevent the car from being stolen or facilitate easier recovery. According to https://www.forbes.com, even the installation of a passively enabled security system can give you handsome savings on the premium.
Safety features: When a car has safety features like anti-lock braking, head restraints, passenger airbags, daylight running lamps, and more, the insurers are more assured that the car will not meet with an accident. Hence, they offer significant discounts as an incentive for people to drive safer cars.
Low mileage: Cars that are sparingly used are eligible for a lower premium. However, the amount of the discount and the mileage specifications vary from one insurer to another so be sure to ask for details.
Discount for multiple cars: When you insure multiple vehicles with the same insurer, he may give you a special discount in appreciation of your loyalty. Apart from offering discounts on multiple vehicles in the name of the same owner, some insurance companies offer discounts to the children of parents who have insured their vehicles with the company for a certain number of years.
Multi-policy discount: If you insure your car with the same company that has insured your home or life, you tend to get rewarded for your loyalty in the form of discounts that can result in a substantial saving. Some companies will offer you a discount of 20% or more to encourage you to keep on purchasing insurance from them instead of stepping out and talking to other companies. However, it still merits shopping around with other leading companies to find out if you can get a better rate.
Payment mode discount: Almost all insurance companies will give you a discount if you make the entire payment upfront. Discounts also exist for online payment or payments using standing instructions given to your bank for making the payments automatically as per a specific schedule.
Adjust your deductible: The premium you pay for car insurance has a lot to do with the deductible you are ready to pay when you make a claim. If you are ready to contribute a larger sum of money towards meeting the repair expenses, the insurance company is more assured that you will not be making small or frivolous claims and that you are more confident of your driving skills. These drivers are rewarded with a lower premium than those opting for the minimum deductible.
When you are shopping for car insurance, it can be very tempting to avail of every discount that you are eligible and go for the company that offers the lowest premium. However, chasing discounts can be a dangerous strategy because at the end of the day you should be more concerned about whether you are adequately covered and how much you may have to shell out as out of pocket expenses in the event of a claim. Even though every state specifies a minimum amount of coverage, you should ensure that you have more than just adequate coverage because you are still liable for the damages to third party property and lives even if your insurance cover is limited. Getting good service from the insurance company in the event of a claim is even more important than getting a hefty discount.