Are there car insurance discounts hidden in your car?

By Jeffrey Steele on September 8th, 2011

Car on saleAre you getting all the automobile insurance discounts to which you're entitled? You may not be, unless you're aware that some vehicle safety features found on increasing numbers of cars allow drivers to shave dollars off on their premiums.

According to Julie Rupert, auto lines director for Madison, Wis.-based American Family Insurance, the company offers discounts if cars have air bags. "In the states of Illinois and Minnesota, there is a mandated discount required if a vehicle has an anti-theft device installed," she adds. "Other features that companies may provide a discount for are electronic stability control (ESC), on-board services such as OnStar, lane departure/blind spot warning systems" and rear-view cameras.

The reason insurance companies are willing to offer discounts for these features is because they tend to differentiate the vehicles from older models, she says. Some features come standard on newer vehicles, but many drivers continue to use older models.

"Discounts are given to reflect there is an actual [or] anticipated cost difference between those vehicles that have such features versus those that don't," she says.

"As these features are designed to protect the occupants of the vehicle, they impact the costs for coverages that deal with occupant injuries, such as medical expense, personal injury protection and uninsured/underinsured motorist. In other cases, states mandate that certain vehicle features receive a discount."

Christopher Boggs, director of education for the San Diego-based Insurance Journal Academy of Insurance, offers another take on the old-versus-new issue. "It seems to me that insurance carriers are giving a break to people who have newer automobiles," he says. "This to some extent makes sense because the cost of providing physical damage coverage is greater for newer cars than older cars, because of their value. And this cost is offset by the credits, to a small degree."

Current and future features

According to Russ Rader, spokesman for the Arlington, Va.-based Insurance Institute for Highway Safety (IIHS), the institute has received anecdotal evidence that some insurers provide discounts for ESC. This feature "significantly reduces crashes," he says.

Offering as much or even more safety benefits, and presumably likely to spur auto insurance discounts as well, is a new feature called City Safety equipped on some Volvo models. If a motorist is about to hit a vehicle and does not react in time, his car can brake itself.

"We have early evidence that City Safety and systems like it are going to significantly reduce the kinds of crashes that insurers pay for," Rader says. "Those are the low-speed, low-severity crashes that occur in everyday commuter driving."

The institute studied the system in the Volvo XC60, and found property damage liability claims were filed 27 percent less often for that model than for other mid-sized luxury SUVs. City Safety is standard on the Volvo XC60, and also on the Volvo S60 sedan, he says. It will be standard on 2012 models of the Volvo S80 sedan and the Volvo XC wagon. "These systems have a lot of potential," he adds.

Mike Barry, a spokesman for the Insurance Information Institute (III), agrees that City Safety has the potential to reduce both collisions and claims. "There may come a day when an auto insurer will look at this particular model and say an auto equipped with City Safety has proven to lower the number of collisions and, subsequently, claims that come into insurers," he says. "But that will have to wait for a greater sample size and more of the vehicles on the road."

Where rubber meets road

There are crash avoidance features on many vehicles today, and more coming down the pike, Rader says. But they haven't been on the road long enough to determine whether they really work. "The government and the institute are encouraging manufacturers to get these systems out on the road, so we can student their effectiveness in the real world," he says.

Jeffrey Steele

Jeffrey Steele is a Chicago-based writer who frequently writes on personal finance and insurance-related topics.

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