Did you know you might be able to substantially reduce your car insurance costs by making sure you're aware of all the discounts your carrier offers?
Car insurance is a highly competitive business. To draw in new customers and retain old ones, insurers offer a variety of discounts. They typically are tied to things you can do to reduce your risk of filing insurance claims.
For example, some insurance companies offer low-mileage discounts -- the less you drive, the less likely you are to be involved in accidents. The amount you can save on discounts varies by carrier, and not all discounts are widely known.
Rather than depending on your car insurance agent to tell you when you qualify for a price reduction, it's best to take the initiative and ask your insurance provider what discounts are available, says David Suarez, director, regional sales development for Mercury Insurance.
Consider asking your insurance agent if you qualify for the following discounts.
1. Discounts for Paying Your Bill in Full
If you pay your entire year's car insurance bill upfront, you may qualify for a price reduction. It's a reward for not requiring your carrier to send out periodic notices telling you that your payments are due.
"The insurer oftentimes will charge you a slightly higher fee for paying in installments," explains Michael Barry, a spokesman for the nonprofit Insurance Information Institute. "Someone who has the resources to pay an entire year's premium in one payment can save money."
Justin Herndon, a spokesman for Allstate Insurance, says the discount for paying in full varies from 5 to 10 percent at his company, depending on which state you live in. To arrange to receive this discount, all you have to do is ask your agent.
2. Discounts for Going Paperless
Want to save money and go green? Herndon says you typically can get a car insurance discount of between 5 and 10 percent if you agree to receive all of your correspondence online, rather than getting letters from your insurer through snail mail.
"A lot of folks want to be able to access things online," Herndon says. "This is a way to do that and be rewarded at the same time."
Going paperless also saves your insurer the expense of mailing correspondence.
3. Discounts for Good Students
If you add a teenager to your family auto insurance policy, it can make your rates soar. One way to offset this expense is to apply for a good-student discount.
Barry says insurers typically require students to have at least a 3.0 grade-point average to qualify.
Jordi Ortega, a spokesman for State Farm Insurance, says his company grants good-student discounts of up to 25 percent, depending on rules set by state insurance regulators. The discount may remain in effect beyond the teen years, until the student graduates from college. Eligibility typically ends at age 25.
"The premise is that there is a correlation between being a good student and having fewer auto accidents," Ortega says.
4. Discounts for Bundling Insurance
One way for insurers to establish a lasting relationship with customers is to sell them more than one line of coverage. To encourage this, insurers typically offer discounts for "bundling" several insurance policies together, such as auto, homeowners or renters, and life.
"Auto insurance often is the entry door," Ortega says. "If customers have a good experience, they may get a quote for the other kinds of insurance."
Suarez says the discount generally is applied to all of the bundled policies. Allstate offers a multiple-policy discount of 10 percent, Herndon says. However, the amount you can save varies by carrier.
5. Discounts for Monitoring Your Driving
In recent years, some insurance companies began offering discounts to drivers who ask to have telematic devices installed in their vehicles. These devices monitor driving behaviors, such as number of miles driven, driving speeds and how hard drivers apply the brakes.
Herndon says Allstate offers this discount. The Allstate program is called DriveWise and was introduced in 2010. The average savings is about 10 percent. Drivers are able to view the results of their monitored driving online.
Progressive has a similar program called Snapshot. It records the times of day you drive, sudden changes in speed and the distance you drive. The amount of the discount you can earn depends on what state you live in. For example, in Alabama, good driving can earn you a discount of between 1 and 30 percent.
Travelers Insurance has a low-mileage discount program called IntelliDrive that's available in Alabama, Connecticut, Indiana, Illinois, Maine, Ohio, Oregon and Virginia. If you sign up for the program, you can receive an immediate discount of up to 10 percent. At renewal, you can receive additional discounts of up to 30 percent, depending on your driving behavior and the regulations for your state.
Asking for car insurance discounts is a good way to potentially save money. You're more likely to receive a discount if you take the initiative and make sure you're aware of all of the ways your carrier allows you to cut costs.
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