May/Jun
2017

Saving Money on Auto Insurance: Discounts for Drivers

Written by Catherine H. Armstrong
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Summer is fast approaching, and high school students will soon begin enrolling in those drivers’ education courses they couldn’t fit into their busy school year schedules. With the addition of new drivers in the household, families may be wondering what type of insurance they must have, what additional insurance comes highly recommended and whether there are any cost-cutting measures.

AUTO INSURANCE REQUIRED

According to State Farm Insurance Agent Sue Madden, the state of Minnesota requires four basic coverage plans that all drivers must have: Liability, which covers the driver as the responsible party in an accident and pays for the other party’s medical and property damage; Personal Injury Protection, which is a no-fault insurance that covers up to $20,000 of medical bills for those injured in an accident where no “blame” is assigned to the either driver; Uninsured Motorist Protection, which kicks in when the other driver is at fault but has no insurance; and Underinsured Motorist Protection, which—similar to Uninsured—picks up any medical costs that fall above the liability limits of the other driver’s policy.

Insurance can be expensive, especially for younger or inexperienced drivers, and there seems to be no end to the number of factors agents consider when assigning premiums. Among these factors, Madden explains, are driving history, the age of the driver, whether the policy holder carries more than one type of  insurance with the company and even some forms of credit. 

DISCOUNTS ON POLICIES

There are ways to save money while maintaining the minimum required insurance by law. One way, Madden suggests, is for policy holders to “bundle” their policies like auto and homeowner’s or renter’s insurance through the same agency. Madden explains, “When you have more than one policy all at the same company, it can provide quite a significant discount.” 

Not surprisingly, new drivers who are statistically more prone to accidents tend to pay the highest insurance costs, but there are several discounts available to young drivers that can bring down those high premiums. Among those is the Good Student Discount, which is offered to high school and college students who have at least a 3.0 GPA. In addition, some insurance companies like State Farm offer programs like “Steer Clear,” which younger drivers can take to earn an additional 10-15 percent discount. This program  consists of a short video and is offered as part of some driver’s education programs.

While it seems most discounts are directed toward student drivers, discounts for older drivers are also available. For example, completing a defensive driving course reduces rates by an additional 10 percent. “Anyone over the age of 55 can take a defensive driving course which, a lot of times, is offered through community education,” Madden explains. 

Madden continues, “Having higher deductibles certainly can make a difference in the premium.” However, increasing the deductible may not be the best option when ensuring younger drivers who, due to inexperience, tend to have more minor fender-benders than seasoned drivers. Taking on a $1,000 or $2,000 deductible for a 16-year-old driver may come with significant unexpected out-of-pocket expenses. 

LOYALTY AND LONGEVITY

Loyalty and a good driving record are other ways to decrease the costs. Madden explains, “When you’re with an insurance company for a length of time, you build up longevity discounts, and that can add up quite a bit over time. And then just keep a good driving record. That’s not a ‘discount,’ but those are the things that would tack on money if you have charges for accidents or other offenses.”

As with all products and services, it’s important to shop around for the best price and plan. Be sure to ask about any discounts for which you might be qualified.

Catherine H. Armstrong is an Oklahoma native transplanted in Rochester. She holds a B.A. in Journalism from the University of Oklahoma and is the author of the historical fiction novel, The Edge of Nowhere, which was released in 2016 and was inspired by her own family’s struggles in 1930s rural Oklahoma. For more information, visit charmstrongbooks.com.