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Insurance is the costliest car-related expense for drivers after the vehicle itself (recently surpassing gas), so it’s no surprise that consumers seek discounts to reduce their car insurance rates. Car insurance companies spend exorbitant amounts of money each year on advertising, and they’re certainly not shy about promoting discounts that supposedly make them more affordable than their competitors. No accidents? Discount! Defensive driving course? Discount! Good student? Discount!

But do these discounts actually reduce what consumers end up paying? Or are they just fluff to make you feel better about shelling out for your premium? Does the degree of the discount really offer relief to your wallet, or could you end up actually paying more by chasing discounts with one company than you would with a company that offers fewer discounts but a lower rate on your premium?

You may also wonder how insurance companies determine your rates. It’s important to note that while factors such as age, marital status, education level and employment have an affect on your rate, they are considered rating factors and not discounts since they directly impact your rates as determined by insurance companies’ unique pricing algorithms.

Here, we’ll discuss some common car insurance discounts, how difficult they are to qualify for and if they really make a dent in what you pay.

1. Anti-Theft Discount

If your vehicle has some type of alarm (in most cases it can be a factory alarm or aftermarket product that you may have added), most car insurance companies will offer a discount on your auto policy. This particular discount can be easy to verify because most new vehicles with a factory alarm can be identified using your vehicle identification number (VIN). This discount is normally fairly small, just a few percentage points off of your premium.

2. Defensive Driving Discount 

This is one of the most misunderstood discounts offered by auto insurance companies. Unfortunately, drivers are often told with a degree of certainty that they will get a discount after completing a defensive driving course. But this just isn’t true in a lot of cases. Yes, there are some insurance companies that will offer any driver a discount for completing a defensive driver course, but most companies have stipulations on how you may qualify. Chances are high that you can only apply the discount if you are 55 or older, have a clear driving record, didn’t take the course as a court-ordered requirement or live in a certain state.

Because you must pay for the course before completing it, you should always call your insurance company to check if they offer a discount for completing the course, what the stipulations may be and what percentage of a discount you’ll receive. Even if you do qualify for the discount, the cost of the course compared to the amount of the discount may tell you it’s not worth the time — or hassle.

3. Good Student Discount 

Young drivers are some of the most expensive to insure due to their lack of experience behind the wheel, and whether parents add their teen to their policy or a young driver secures his own coverage, the rates will be high. Insurance companies often offer discounts for good students, helping to offset the high costs of insuring a young driver who’s still in school. Commonly, a student (whether in high school, undergraduate or occasionally graduate programs) has to maintain a 3.0 GPA or better to qualify — and proof is generally required in the form of a report card, transcript or Dean’s letter.

Still, as is the case with insurance pricing, the good student discount varies by company, state and other circumstances. Certain insurance companies will only offer the discount if the student is listed on a parent’s policy; others will offer it only if the student is covered on his or her own separate policy; others don’t offer a student discount at all. Your best bet is to contact your insurance provider and ask about the discount, as it is normally a significant percentage.

4. Homeowner Discount

A homeowner discount is quite literal, though the discount will vary based on the type of residence, be it a single-family home, condominium or a mobile/manufactured home. Simply let your insurance company know you own your residence (and what type of dwelling it is), and they’ll let you know how the discount will affect your rate — it’s normally fairly hefty. You’ll also have to submit proof that you own your home, such as a home insurance policy, tax statements or a deed.

The homeowner discount is completely separate from the bundle discount that many insurance companies now offer for insuring your home and car through the same company, which is another great way to lower your rates. The bundle also benefits renters who purchase renter’s insurance through the same company.

5. Multi-Vehicle Discount 

Another simple-but-helpful discount may apply for multiple vehicles covered on the same policy. With auto insurance, there is a base cost of each policy that has nothing to do with your actual coverage. (In addition to rating factors, insurance pricing is affected by the company’s own level of financial solvency and overhead costs like paying employees.) If you were to insure two vehicles on two separate policies, then you would be paying two base costs. Combining those two vehicles on one policy allows the insurance company to offer a discount and you avoid paying multiple base costs. It’s a win-win scenario. (Note that additional household members will need to be listed.) This discount can be fairly significant and is easy to get — in most cases, it automatically applies when you add a vehicle to a policy.

6. Proof of Prior Insurance Discount (POP) 

One of the largest discounts applies for drivers who maintain their prior insurance coverage until starting a new policy. Gaps in insurance coverage are not good for your rates. Insurance is all about risk, and auto insurance companies see a driver with existing coverage as a much lower risk. Therefore, they are willing to offer hefty discounts to entice those drivers to switch companies for lower rates. The POP discount is fairly simple to qualify for in most states and only requires you provide proof that you were insured without any break or lapse in coverage for at least six months prior to starting your new policy. (California is the exception — it does not allow insurance providers to offer this discount.)

Seeing Through the Discount Fog

It’s easy to get sidetracked by all the persuasive “money-saving” advertising insurance companies put out there, but being a smart and informed shopper will help you cut through the fog. Do the research so you can answer the following question: How much is this particular coverage from this insurance company going to cost me? If discounts make it the best deal for you, great, but it’s also a real possibility that you can find a rate that fits your budget without them. Discounts and low rates aren’t always mutually exclusive, even if the TV ads say otherwise.

Remember, it pays to read the terms and conditions carefully on any financial paperwork so you can find the deal that’s best for you. It can also help to have a good credit score, since it may qualify you for better rates on auto loans, for example. (You can see where your credit score stands by viewing your two free credit scores, updated monthly, on Credit.com.)

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Image: Lisa F. Young

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