Car Insurance Discounts and Safety Technology

Car insurance companies have offered discounts for a variety of safety technologies for over 20 years. Early on these discounts were for anti-lock brakes and driver side airbags. The discount for airbags shifted as airbags moved from protecting the driver only, to both the driver and front seat passenger, to side impact and curtain airbag configurations to protect against head trauma. Some insurance companies even offered discounts for cars equipped with daytime running lights because they were easily visible to other motorists on the road.

Over the past few years, the amount of safety equipment on vehicles has soared with the release of automatic braking systems, lane departure warning, blind spot detection, backup cameras, road departure mitigation and many more (see The question some of my readers has asked is whether or not this safety technology will decrease the cost of your car insurance today or sometime in the near future.

Today, the answer is a qualified no. Most car insurance companies are not giving discounts for these safety technologies. While the data from the Insurance Institute for Highway Safety (IIHS) is very promising for automatic breaking to reduce the number of collisions, only two of the top eleven car insurance companies offer a discount for a car equipped with an automatic braking system, The Hartford and Liberty Mutual.

Hartford’s discount is up to a whopping 3% of the annual premium and is available only in Illinois, Ohio, Minnesota, Oklahoma, and Arkansas. That 3% works out to a savings of $30 a year for every $1,000 you spend on car insurance. You’d save more if you cut out one latte a week from Starbucks. Liberty Mutual hasn’t released the amount of the discount nor what states it’s available in.

The other top nine car insurers are conducting their own studies to corroborate the IIHS data. What they’re seeking to determine is just how effective these systems are at crash avoidance. If IIHS is correct in their estimates, automatic braking systems can prevent about 700,000 rear end crashes annually.

There’s another issue at stake though, and that is will these new safety technologies drive up repair cost? Allstate’s spokesman, Justin Herndon, stated, “Something that used to cost 60 or 70 bucks for an emblem to be replaced now can cost a couple grand.” This has been a concern among all car insurance companies as the number of computer operated safety technologies explodes which drives up vehicle and repair cost.

I believe we’ll see more car insurance companies offer discounts on these safety technologies as new car buyers adopt them and more data is accumulated on how well they perform. I don’t believe that will happen quickly though, nor do I expect it to be rolled out nationwide by all carriers anytime soon. What will be most interesting is whether or not car insurance companies can point to a large enough reduction in crashes to offset repair costs for vehicles with these systems and the discounts they offer policyholders.

In the short term, my advice for vehicle owners is to compare car insurance offerings from multiple companies, ask what discounts are available, drive safely, and have good credit. These actions will help reduce what anyone pays for car insurance whether or not they adopt one or more of these technologies. What do you think? Share your thoughts and questions with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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