Auto Insurance Rates: Can You Negotiate?

Auto insurance rates are not negotiable. States regulate car insurance costs, and insurance companies use algorithms and proprietary tools to determine their rates. However, understanding how insurance companies set their rates and the factors that affect them may help you achieve a lower rate. There are alternative ways to make savings on auto insurance, such as shopping around for the best rates, taking advantage of discounts, and increasing your deductible.

Compare quotes from different insurance companies

Comparing quotes from different insurance companies is a great way to find the best deal on car insurance. It's free, simple, and can save you a lot of money. Here are some tips to help you compare quotes and find the right policy for your needs:

• Decide on the coverage you need: Most states require drivers to carry a minimum amount of liability coverage. If your vehicle is newer or leased, you may also need additional coverage such as comprehensive and collision insurance.
• Gather your information: To get accurate quotes, you'll need to provide some basic information, including your age, gender, marital status, vehicle information, and driving history.
• View rate comparisons: Compare rates from different insurance companies to see which ones offer the lowest rates overall and for specific driver groups, such as teen or senior drivers.
• Learn about individual insurers: Research individual insurance companies to learn more about their rates, customer service, claims handling, and customer loyalty.
• Compare quotes: Use comparison websites or get quotes directly from insurance company websites. Make sure to compare quotes for the same types and levels of coverage to ensure an accurate comparison.
• Look for discounts: Many insurance companies offer discounts that can help you save money on your policy. Be sure to ask about any discounts you may be eligible for.
• Consider a higher deductible: Choosing a higher deductible can lower your premium, but keep in mind that you'll have to pay more out of pocket if you need to file a claim.
• Shop around regularly: Insurance rates can change over time, so it's a good idea to compare quotes from different companies every year or whenever your life circumstances change.

Ask about available discounts

While auto insurance rates are not negotiable, there are several discounts available that can help lower your premium. These discounts vary across insurance companies, so it's important to ask about what is available to you. Here are some common types of discounts to look out for or inquire about:

Multi-Policy Discounts

You can often get a discount if you buy more than one type of insurance policy from the same company. This could be in the form of an auto and home insurance bundle, or you might be able to save by adding other types of insurance, like life or business policies.

Multi-Vehicle Discounts

If you have more than one vehicle, insuring them with the same company can often lead to a discount.

Safe Driver Discounts

If you have a clean driving record, free of accidents, tickets, or DUI convictions, you may be eligible for a safe driver discount. This usually means having no incidents in the past several years.

Vehicle Safety Features Discounts

If your car has safety equipment like side curtain airbags, anti-lock brakes, or an automatic braking system, you may be able to get a discount on your insurance.

Payment Discounts

Paying your insurance in full, rather than in monthly or quarterly instalments, can sometimes lead to a discount. Additionally, setting up automatic payments through electronic funds transfer or choosing paperless billing can also result in savings.

Student Discounts

Full-time students who maintain good grades (usually a B average or above) may be eligible for a discount. This is often available to students under 25 years of age, but the age limit can vary by insurance company.

Defensive Driving Course Discounts

Taking a defensive driving course can sometimes lead to a discount on your insurance. However, this may be limited to specific age groups, like seniors or teens.

Affinity Discounts

Your affiliations with certain organisations or groups may qualify you for a discount. This could include being a member of a professional organisation, an alumni association, or a group like AARP.

Military and Veteran Discounts

If you are a current or former member of the military, or are related to someone who is, you may be eligible for a discount.

Low-Mileage Discounts

If you drive fewer miles than the national average (13,500 miles per year), you may be able to get a discount.

Customer Loyalty Discounts

Staying with the same insurance company for several years may earn you a loyalty discount.

Remember that not all discounts are available in every state, and the eligibility requirements can vary. It's always a good idea to ask about what discounts are available to you and how you can qualify for them.

Increase your policy deductible

While car insurance rates are not negotiable, there are several ways to get a better rate. One way to do this is to increase your policy deductible.

A deductible is the amount you pay out of pocket before your insurance policy kicks in. For example, if your vehicle incurs $1,500 of damage for something your insurer will pay for, and your deductible is $500, you'll pay that amount and your insurer will cover the remaining $1,000.

Raising your deductible can lead to lower monthly insurance payments and cheaper premiums. For instance, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Moving to a $1,000 deductible can save you 40 percent or more.

However, it's important to ensure you have enough savings to cover the higher deductible in the event of a claim. You should also be aware that the amount of damages may sometimes be less than your deductible, in which case you would need to cover the cost of repairs yourself.

In summary, increasing your policy deductible can be a strategic way to lower your insurance premium, but it's important to carefully consider your financial situation and ensure you have enough savings to cover the higher deductible if needed.

Shop around for insurance rates

While auto insurance rates are not negotiable, shopping around for insurance rates is a great way to save money on your premiums.

Compare Quotes from Multiple Insurers

Comparing quotes from multiple insurers is a highly effective way to find the best rates for you. This is because auto insurance companies use varying methods to underwrite policies, so the rate you are quoted might not match a competing company's quote.

Compare Quotes from Online Insurance Comparison Sites

Using an online insurance comparison site is a good way to avoid the tedious task of going through every individual company's quoting process. However, be aware that some sites will sell your data to insurance companies, which may result in an increase in spam and unwanted contact. The Zebra, for example, pledges not to sell your information to spammers and offers personalized quotes from more than 100 insurance providers.

Compare Quotes from Individual Insurers' Websites

You can also go to company websites and get auto insurance quotes online. This option is good if you know what you need, and some companies offer discounts for shopping online. However, online quote forms may not cover all situations, such as classic car insurance or rideshare insurance.

Compare Quotes from Insurance Agents

Another option is to get a quote from an insurance agent, also known as a captive agent. These agents only work for a single company, so they won't compare other options for you, but they will know their company's coverage options and policies inside out.

Compare Quotes from Insurance Brokers or Independent Insurance Agents

Insurance brokers and independent agents work with multiple insurance companies, so they can help you compare options from several providers. They are also knowledgeable about the companies they work with and can help you find the best coverage for your situation. However, they make more money if you buy more coverage, so they have an incentive to sell you more.

Compare Quotes Regularly

It's a good idea to shop around for new car insurance every time your policy is up for renewal. This could be once or twice a year. Even if you decide to stay with your current company, shopping around will help you find out if a better option has become available.

Lower coverage on older vehicles

While you cannot negotiate auto insurance rates, you can take steps to lower your coverage on older vehicles. Here are some strategies to help reduce your insurance costs for older cars:

• Drop Full Coverage: When your car reaches about 10 years old, it is often more cost-effective to switch from full coverage to liability-only insurance. While this means you'll have to pay for repairs or replacements out of pocket if your car is damaged or stolen, you can significantly lower your insurance bill. For example, dropping full coverage can reduce your costs by approximately $90 per month or $1,080 per year. The cost of insurance drops slowly as a car gets older, but its value decreases more rapidly, making full coverage a poor investment for vehicles over 10 years old.
• Compare Quotes from Multiple Insurers: Shopping around for insurance rates is an effective way to find a better deal. Different companies offer varying rates, so gathering quotes can help you identify a cheaper option.
• Ask About Discounts: Many insurance companies offer discounts, so it's worth checking if you qualify for any of them. These could be based on factors like your profile, payment methods, driving history, vehicle equipment, or customer loyalty.
• Increase Your Deductible: A deductible is the amount you pay out of pocket before your insurance policy starts covering damages. By increasing your deductible, you can typically lower your premium. However, keep in mind that this means you'll have to pay more upfront if you have an accident or claim.
• Switch to Pay-Per-Mile Insurance: If you don't drive a lot, consider pay-per-mile insurance instead of a standard policy. This option is especially advantageous if you drive less than 12,000 miles per year.
• Remove Comprehensive Coverage: If your car is older and not worth much, you may not need comprehensive coverage, which protects your vehicle in case of damage or theft. By removing this coverage, you can lower your premium. However, if you have a loan on the vehicle or are leasing it, you may be required to maintain comprehensive coverage to protect the lender's investment.
• Review Your Policy Regularly: As your car ages, revisit your insurance policy to see if there are any coverages you no longer need. For example, if your premiums for comprehensive insurance exceed 10% of your car's cash value, it might be more economical to remove this coverage. Just ensure you don't leave yourself underinsured.
• Equip Your Vehicle with Anti-Theft Devices: Older cars may be more susceptible to theft due to lacking modern security features. Installing anti-theft devices, such as tire locks or kill switches, can help deter thieves and may even qualify you for a discount on your insurance.
• Choose Minimum Coverage: If your older car has a low value, you may opt for minimum coverage, which only covers damages to another driver's vehicle if you are at fault in an accident. This type of policy can help you save money, but be sure to comply with your state's minimum insurance requirements.

Frequently asked questions