Auto Insurance Rates: Can You Negotiate?

While it is not possible to negotiate auto insurance rates, there are several ways to lower your costs. Firstly, you can shop around for quotes from multiple insurers and compare prices to find the best deal for you. You can also ask your current insurer about possible discounts and see if you qualify for any. Increasing your deductible, which is the amount you pay out-of-pocket before your insurance policy kicks in, can also lower your premium. Additionally, keeping a clean driving record and understanding your coverage can help reduce your auto insurance costs.

Compare quotes from multiple insurers

Comparing quotes from multiple insurers is the best way to get cheaper insurance. In fact, the average comparison shopper saves $60 per month on their car insurance by comparing quotes, which means you could be saving over $700 a year.

How to Compare Quotes

Firstly, determine your budget, the type of insurance you need, and how much coverage you require. The average U.S. driver pays $135 per month for car insurance, so that’s a good place to start.

Next, gather the relevant information, such as your social security number, driver’s license number, vehicle identification number (VIN), and current coverage details.

Then, use an insurance comparison website. These sites make comparing quotes faster and easier because you only have to provide your information once, and you can compare prices and coverage options from different companies at the same time. However, not all comparison sites are created equal. Several sites advertise the ability to compare quotes, but many are just lead-generation websites that sell your personal information. True comparison sites partner with insurance companies to provide real-time quotes.

After that, research the companies with the best quotes. The largest insurance companies won’t always have the best price for your specific needs. Third-party websites analyse insurance companies based on customer feedback and experiences with things like website and mobile performance, the shopping experience, the claims process, and financial strength.

Finally, select the best quote for you.

When to Compare Quotes

When your policy comes up for renewal, take some time to compare car insurance quotes again to see if your current insurer is still the best deal. You won’t know if you could find lower rates or get a better deal if you don’t get new quotes.

You should also compare insurance every year to make sure you're always getting the best rate. At the very least, you should shop for quotes any time something in your life changes that could affect your rates, such as buying a new car, moving, changing drivers on your policy, getting a ticket, or being involved in an accident.

Ask about available discounts

While car insurance rates are non-negotiable, there are several discounts that car insurance companies offer. These discounts are based on a variety of factors, including your profile, preferred payment methods, driving history, vehicle equipment, and more.

Vehicle Safety Features Discount:

Airbags, anti-lock brakes, daytime running lights, and theft prevention devices can all help you qualify for a discount. Airbags and theft prevention devices typically lead to the most significant discounts as they reduce the cost of medical payments and comprehensive coverage, respectively. Some insurers may also offer discounts for dashboard-mounted cameras or similar safety devices.

Good Driver Discounts and Claims-Free Discounts:

Most major insurers offer significant discounts to good drivers who haven't had at-fault accidents, filed claims, or received tickets or DUI convictions in the past three to five years. Maintaining a clean driving record and driving defensively can help you qualify for these discounts.

Driver Education or Safe Driving Course Discounts:

Many insurers offer discounts to policyholders who take approved safe driving or defensive driving courses. These courses can help improve your driving skills, reduce the risk of accidents, and lower your insurance rates.

Good Student Discounts:

Full-time students with good grades (a "B" average or higher) in high school or college can often receive discounts on their car insurance. Insurers view good students as more responsible and less likely to make claims.

Military or "Preferred Occupation" Discounts:

Many insurance companies offer discounts to veterans, active military personnel, and individuals in specific occupations, such as police officers, firefighters, or teachers. Be sure to inquire about any applicable discounts based on your occupation or service.

Affiliate Discounts:

If you belong to a group partnered with your car insurer, you may be eligible for a group discount. These partnerships could include credit unions, alumni associations, professional associations, fraternities/sororities, and more. It's worth checking if any of your affiliations offer insurance discounts.

Multi-Car Discounts or Multi-Policy Discounts:

Insurers often reward customers who insure multiple vehicles or hold multiple policies with them. For example, you can bundle your home/renters insurance and auto insurance or combine auto insurance with life insurance to receive a "bundling" discount.

Mature Driver Discounts:

Senior citizens may be eligible for discounts if they take state-approved mature driver courses. These courses help older drivers stay up-to-date with driving laws and safety practices, reducing their insurance rates.

Low Mileage Discounts:

If you drive fewer miles than the average, you may qualify for a low mileage discount. Typically, you'll need to drive less than 10,000 miles per year, and some companies may require an even lower annual mileage limit. Driving less reduces your risk of accidents or moving violations, making you eligible for lower rates.

Usage-Based Insurance Discount:

Some insurance carriers offer usage-based programs where you can receive a discount for installing an app on your phone that evaluates your driving habits. These programs encourage safe and responsible driving and can lead to significant savings on your insurance premium.

Remember to ask your insurance provider about all the available discounts and how you can qualify for them. Combining multiple discounts can further increase your savings, so be sure to take advantage of as many as you can.

Increase your policy deductible

While it's not possible to negotiate with a car insurance company, you can increase your policy deductible to lower your premium. A deductible is a set amount you pay out of pocket before your policy begins to cover damages. Typically, insurers offer deductibles of $250 or $500, but you can opt for a higher deductible of $1,000 or even $3,000. By choosing a higher deductible, you are taking on more financial responsibility in the event of an accident, which reduces the risk of a claim for the insurance company and results in lower premiums.

For example, according to a report from InsuranceQuotes.com, increasing your deductible from $500 to $1,000 can lower your premium by 9%. However, it's important to consider whether you would be able to afford the higher deductible in the event of an accident. If you're a good driver and/or don't drive your car often, opting for a higher deductible can be a strategic way to lower your premium. On the other hand, if you're accident-prone or have kids who will be driving soon, it's probably best to stick with a lower deductible. Ultimately, the decision to increase your policy deductible depends on your personal circumstances and your comfort with taking on more financial risk.

Switch to pay-per-mile insurance

While it is not possible to negotiate with a car insurance company, there are several ways to reduce your rates. One way is to switch to pay-per-mile insurance, which is ideal for low-mileage drivers.

Pay-per-mile insurance is a type of car insurance that charges you based on how much you drive. You pay a base rate per month, which is determined by factors such as your age, vehicle, and driving record, plus a per-mile fee. The base rate is usually $30 or higher per month, and the per-mile fee is typically a few cents. For example, if you drove 200 miles in a month at 4 cents per mile, you would be charged $8 for mileage, in addition to your base rate.

Pay-per-mile insurance is a good option if you drive less than 12,000 miles per year or 1,000 miles per month. If you drive more than that, the per-mile fees can add up and make the insurance expensive. Additionally, pay-per-mile insurance is not available in all states, and some of the insurance companies offering these policies are relatively new and untested.

There are a few different companies that offer pay-per-mile insurance, including Metromile, Allstate, Mile Auto, and Nationwide. The availability of these companies varies by state.

Before switching to pay-per-mile insurance, it's important to consider the potential drawbacks. The insurance may be more expensive if you drive a lot in a given month, and some people may not be comfortable with their insurer tracking their mileage. Additionally, pay-per-mile insurance may not be accepted by lenders if you lease your car or have an auto loan.

Determine if you need all the coverages in your policy

When determining whether you need all the coverages in your auto insurance policy, it's important to understand the different types of coverage available and assess your specific needs. Here are some factors to consider:

Understand the Types of Coverage

Firstly, familiarize yourself with the standard and optional coverage types offered by insurance providers. Standard coverage typically includes liability, collision, and comprehensive insurance. Liability insurance is mandatory in most states and covers bodily injury and property damage to others in an accident. Collision insurance covers repairs or replacement of your car in an accident, while comprehensive insurance covers damage to your vehicle from non-collision incidents like vandalism, theft, or natural disasters.

In addition, there are several optional coverage types, such as uninsured/underinsured motorist coverage, personal injury protection (PIP), medical payments coverage (MedPay), gap insurance, rental reimbursement insurance, and roadside assistance insurance. Each of these serves a specific purpose, so understanding what they cover will help you decide if you need them.

Assess Your Financial Situation and Risk Factors

Consider your financial situation, including your assets, savings, and net worth. If you have significant assets, you may want more extensive coverage to protect yourself from potential lawsuits and financial losses. Evaluate your risk factors, such as your driving record, age, vehicle type, and location. If you live in an area with high theft rates or dense traffic, you may want more comprehensive coverage. Additionally, if you have a history of accidents or infractions, you may want to increase your liability coverage to protect yourself from higher costs in the event of an accident.

Review Your Policy Regularly

Insurance needs can change over time, so it's important to review your policy periodically. Life changes, such as getting married, having children, or purchasing a new vehicle, may impact the type and amount of coverage you need. Additionally, insurance rates and discounts can vary across providers, so shopping around and comparing quotes can help you find the best coverage for your needs at a competitive price.

Understand State Requirements and Lender Requirements

Different states have varying minimum requirements for auto insurance coverage. Be sure to understand the mandatory coverage types and minimum liability limits in your state. Additionally, if you lease or finance your vehicle, your lender may have specific requirements for collision and comprehensive coverage. Make sure you comply with these requirements to avoid any issues.

In summary, determining your need for auto insurance coverage depends on various factors, including your financial situation, risk factors, state requirements, and lender requirements. By regularly reviewing your policy and staying informed about the different coverage types available, you can make informed decisions about the coverages you need to protect yourself and your assets adequately.

Frequently asked questions