Are Car Insurance Rates Negotiable?

You can sometimes haggle on the price of a vehicle, but can you negotiate for a cheaper insurance premium?

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Can you negotiate car insurance rates?

In short, no. Because car insurance is a state-regulated industry, many pricing factors depend on state legislation. Like electricity costs, you simply cannot haggle for a lower monthly car insurance payment. What you can do, however, is shop around. Let’s explore.

How to negotiate lower car insurance rates
  1. Compare rates from different insurance providers
  2. Know when to file a claim
  3. Understand how much coverage you need
  4. Bundle all insurance poicies
  5. Find discounts

1. Shop for car insurance every six months

Although you can’t negotiate your car insurance rate, you’re not contractually obligated to stay with your insurance company. If you find a cheaper rate elsewhere, you can switch insurance providers. Depending on when you cancel and the fine print of your car insurance policy, you might incur fees.

Some companies will add a fee if you cancel very early or very late in your policy period. Outside of these circumstancees, an insurer should not assess a fee if you cancel early. Any premium for which you've paid in advance should be refunded, as well.

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2. Be smart with your insurance claims

Car insurance can be a double-edged sword. The more you use it, the more it costs. The general rule of thumb with auto insurance is not to use it if you can afford to cover the out-of-pocket costs yourself.Most insurance companies will charge you extra for up to three years after an at-fault claim.

While the rate hike may vary based your location and provider, we created an average rate increase after filing a collision claim in which the damage exceeded $2,000. See below how much this claim will cost over a three-year period.

Year After AccidentAverage Annual Premium
No Accident$1,427 — $0 Increase
1 Year Later$2,114 — $687 Increase
2 Years Later$2,801 — $1,374 Increase
3 Years Later$3,488 — $2,061 Increase

Over a three-year period, this claim will cost you $2,061 plus your deductible. In this example, you should not file a claim if the out of pocket repairs is less than the rate increase ($2,061) and your deductible. Methodology can be found here.

If you find yourself unsure of whether or not to file a claim, reference our guide below.

  1. Get an estimate for the repairs at an auto shop
  2. Use our State of Insurance analysis to see by how much an at-fault accident may raise rates in your state. Consider this increase over a period of three to five years.
  3. Compare the out-of-pocket expenses to the rate increase you'd incur and your deductible. If it is cheaper to file a claim, do that.

Additional resources

If you’re looking for additional information relating to claims, see our guides below.

How to find cheap car insurance with claims
Should you file a car insurance claim?

3. Be smart with your coverage

The value of your vehicle will determine what kind of insurance coverage you need. If your vehicle is owned and worth less than $4,000, you probably do not need comprehensive and collision coverage. These coverages, only required if you’re leasing or financing a vehicle, are designed to protect your vehicle. However, if your vehicle isn’t worth much, you might be paying for coverage you might not need. See below how your premiums can change based on the coverage you carry.

Coverage LevelAverage Annual Premium
$500 Deductible$1,427
$1,000 Deductible$1,268

You can determine the value of your vehicle via the Kelley Blue Book and NADA online. If you decide to remove collision and comprehensive coverage, consider keeping uninsured motorist bodily injury and property damage coverage. This way, you still have coverage in the event a driver without insurance or insufficient insurance damages your vehicle.

It's also important to ensure you’re properly covered. Many drivers leave themselves and their assets at risk in order to keep their premiums low. If you have a loan or lease on a vehicle or your vehicle is valuable, you should carry collision, comprehensive, and potentially gap insurance. Without these coverage options, you will have no coverage in the event of an at-fault accident. Your liability offers no coverage to your vehicle if you're determined to be at-fault. Find out how much coverage you need here.

4. Bundle your policies

If you rent or own a home or condo, make sure you keep all your insurance policies together with the same company. Not only will this cut down on the number of insurance companies you have to deal with, but will lower the premium on each policy.

For more information regarding bundling by policy, see our guides below!

Best car and renters insurance policies
Best car insurance for homeowners
Car and condo insurance: best bundling options

5. Double check for discounts

You shouldn’t stay with an insurance company simply because of a single discount. However, it’s a good idea to look for the best possible discounts, depending on your driving profile. See below some common auto insurance discounts. Follow the links for more information.

Not all of these discounts will be available to you, as they are subject to state and insurance provider restrictions. While discounts can add up to save you money, it is by no means the best solution for lowering your car insurance premiums. The absolute best way to ensure you're paying the least for car insurance is to follow all our tips. Shop around as much as possible, keep your claims as minimal as possible, and understand what you're covered for.

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