Auto Insurance Discounts for Homeowners

Homeowners are considered to be more responsible drivers and therefore some vehicle insurance companies offer attractive discounts to motorists who live in their own home, even if they don’t buy their home insurance policies from the same carrier. These discounts can provide savings on car insurance premiums, making it an appealing option for homeowners looking to cut costs without compromising on coverage. Usually the discount is applied to most types of auto insurance coverage that makes it extra valuable. To qualify for the homeowner discount, ensure that you meet below requirements related to homeownership status, matching garaging address, and state of residency.

The percentage of the discount offered to homeowners on their auto insurance can vary among car insurers and it is on average around five percent. For instance, Progressive offers approximately a 3% savings, while Direct Auto advertises a larger discount on car insurance for homeowners. This discount may not be available in some states.

When you apply for vehicle insurance, there is typically a question about your homeownership status. Often, all it takes to get the discount is to tick the box that says you are a homeowner. The discount is normally automatically applied to qualifying applicants in states the discount is available. You may then need to send further information and documentation to prove that you do own your home.

Qualification Requirements for Auto Insurance Discounts for Homeowners

Certain criteria must be met to qualify for the discount like actually living in the property. Here are the details of the requirements:

  1. Homeownership status: To be eligible for the discount, the policyholder or their spouse must own their home, which can be a house or an apartment. Unfortunately, this discount does not typically apply to mobile homes.
  2. Proof of homeownership: Policyholders must provide proof of homeownership when applying for the discount. Acceptable documents as proof may include:
    • Property tax assessment: A document prepared by the local tax assessor’s office, issued annually or biennially, depending on the locality.
    • Mortgage statement: It contains information about mortgage payments and the mailing address.
    • Homeowners insurance declarations page: This page lists the home insurance coverages, limits, and deductibles of the homeowner’s policy.
    • Other local agency documentation: Information from the county regarding property appraisal or taxes showing the insured’s name and address.
  3. Matching garaging address: The proof of homeownership must list the same name and property address as the garaging address listed on the car insurance policy. The garaging address refers to the place where the vehicle is parked a majority of the time.
  4. State of residency: The policyholder must reside in a state where the homeowner discount is available and offered by the insurance company.

Claiming the Discount for a Spouse’s Homeownership

In some cases, policyholders may still be eligible for the homeowner discount on car insurance even if they did not own a home when they first purchased their auto insurance policy. If their spouse owns a home, they can claim the discount provided they meet the other qualification requirements. It’s essential to discuss this with your insurance agent to ensure eligibility.

Reasons for Vehicle Insurers Offering Homeowner Discounts

Automobile insurers offer discounts to homeowners based on the belief that individuals who own their homes are generally considered lower risk. Studies and decades of data analysis have shown a correlation between homeownership and responsible behaviors. These behaviors extend beyond homeownership and often lead to safer decision-making while driving.

Studies Supporting the Homeownership Discount

Studies have supported the idea that homeowners tend to exhibit more responsible behaviors, leading to lower loss claims for car insurance companies. For instance:

  1. Social Forces article: An article published in Social Forces found that individuals who own their homes were 1.28 times more likely to be involved in community groups and 1.32 times more likely to join a civic association. This increased social responsibility is believed to translate into safer driving decisions.
  2. Study on rental vs. ownership: A study conducted in 2015 evaluated 700,000 respondents over two years and compared drivers who rented with those who owned their homes. It revealed that younger drivers aged 18 to 24 who lived with their parents had the highest claim rate at 24.4%, followed by tenants at 19.7%. In contrast, those who bought their apartments at a young age made claims only 17.6% of the time. While the difference narrows with age, companies still consider this factor when offering discounts.
  3. Confirmed higher rates: A study carried out by Consumer Federation of America confirms that auto insurance companies do charge lower rates to homeowners in comparison to renters. Across multiple studies and decades, insurers believe the difference between renting and owning is an influential factor. That is mainly why they offer cheaper car insurance for homeownership, even if you don’t bundle.

Additional Discounts for Bundling Home and Auto Insurance

In addition to the homeowner discount on vehicle insurance, some insurers provide even larger discounts (around 15% on average) when policyholders bundle their home and automobile insurance policies together. This bundling option allows homeowners to save substantially on both policies, making it a popular choice for cost-conscious individuals. Some companies may offer both the homeownership and bundling discount simultaneously, resulting in even more substantial savings for policyholders.

Nevertheless, not only some car insurance companies may not consider homeownership as a factor but also companies may offer different level of discounts. Remember, each vehicle insurance company has its own pricing model, so it’s crucial to shop around and compare quotes to find the best deal that suits your unique needs and circumstances. Owning a home can indeed open doors to savings on auto insurance and bring you one step closer to turning your home into an even more comfortable and cost-efficient one.