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Many drivers are missing out on car insurance discounts (Survey)

About two out of five drivers either do not receive a discount from their car insurance company, or are unsure of whether or not they get a price break, according to a survey commissioned by

In addition, there is widespread confusion about the role credit scores play in insurance rates. Fifty-one percent of people surveyed are unsure if credit scores are used, or think they are never used in determining auto insurance premiums.

Pete Moraga, spokesman for the Insurance Information Network of California, says he isn’t surprised that many people are confused about their auto coverage.

Concluding their first vehicle purchase"One of the biggest challenges we have as an insurance industry is that most people don't read their policies," he says. "I understand that. Insurance issues and policies are not sexy."

What car insurance discounts could you qualify for?

The study found that most consumers are aware of common car insurance discounts. For example, 89 percent of people surveyed realize that insurance companies generally offer a price break if you have more than one car insured with the same company.

Meanwhile, 81 percent of respondents understand that insurers offer discounts to some drivers who take a defensive driving course.

Lynne McChristian, Florida representative for the nonprofit Insurance Information Institute, says many drivers automatically get two specific discounts, even if they do not realize it.

"If you've got a good driving history and a safe car, you're likely getting insurance discounts," she says.

However, other discounts need to be requested by the policyholder, and many aren’t as widely known. For example, 35 percent of respondents either are not sure whether students with good grades sometimes get car insurance discounts, or state flatly that such discounts do not exist at all.

Both McChristian and Moraga cite the good-student discount as being among the most overlooked price breaks.

"That's one that very few people know about, but it's very important because young people are very expensive when it comes to insurance," Moraga says. Some carriers extend good-student discounts to adults up to age 25, even after they graduate from school.

See also: Teen Drivers: Getting car insurance for young drivers

Most auto insurers offer various types of discounts. However, the nature of these price breaks and the amount you can save vary from insurer to insurer.

Some of the more common auto insurance discounts include:

  • Insuring more than one car with the same provider.
  • Staying accident-free and having no moving violations for a period of years (typically, about three years).
  • Installing antitheft devices.
  • Getting good grades in school.
  • Driving less frequently than the average policyholder.
  • Bundling coverage, such as purchasing both auto and home insurance from the same company.
  • Taking a defensive driving course.
  • Remaining with the same insurance company over a long period of time.

Moraga says it’s difficult to pin down how much you can save.

"It varies from state to state and company to company," he says.

How credit scores affect your car insurance rates

The survey also revealed that many drivers are unaware of the role their credit score plays in determining their auto insurance costs.

Twenty-nine percent of respondents say credit scores are never or not always used when determining auto insurance rates. Another 22 percent were unsure if credit scores ever are used.

credit scoreIn truth, most states allow credit scores to be used as a key component of a driver's "insurance score," a measure insurers use when setting rates. The exceptions are California, Hawaii and Massachusetts, which prohibit insurers from using credit information to set rates.

Insurance scores include factors such as the number and type of credit accounts you have; your history of bankruptcies, judgments and collections; your payment history and account balances.

Statistics show that policyholders with good credit scores tend to file fewer claims, says Janet Patrick, spokeswoman for the Illinois Insurance Association. That makes them less risky to insure.

"Those with good credit scores often pay less for insurance," she says.

There are many ways to improve your credit score, although they all take time, according to MyFICO, the consumer division of Fair Isaac, the company that invented the FICO credit risk score that many lenders use.

Here are 3 tips for improving your credit scores:

1. Request a free copy of your credit report. By law, you are entitled to one free report from each of the three major credit-reporting agencies. Request your report at the website. Look for errors and report them to the agencies.

2. Make all credit payments on time. Late payments hurt your credit score more than any other factor. Setting up an automatic payment system can ensure your payments are on time each month. The longer your history of on-time payments, the more your credit score will improve.

3. Reduce your debt level. High levels of outstanding debt hurt your credit scores. Maintaining your present level of available credit while also reducing your debt load improves your scores.

If you have poor credit, shopping around and getting quotes from several insurance companies is especially important. That's because not all insurers use credit-based insurance scores when setting rates, McChristian says.

How to save money on your car insurance

Moraga says policyholders who educate themselves about all aspects of their insurance policy are much better off in the long run.

"The better you understand your policy and coverage, the better you're going to able to know that you have the right coverage at the right price," he says.

He adds that auto insurance is a very competitive industry. Consumers who gather many different quotes typically can find an opportunity to save money.

"Because there is that competition and so much stress on getting new consumers, you as a consumer have a lot of power to determine what you are going to pay for insurance," he says.

Patrick says talking to your agent every time your auto policy renewsis the best way to stay on top of discounts and other ways to save.

"Policyholders should review coverage limits, deductibles, endorsements, discounts (and) contract terms," she says.

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