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 car insurance rates 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 circumstances, 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 on your location and provider, we've 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.

 

IMPACT OF AT-FAULT CLAIM OVER 3 YEARS
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 cost less than the rate increase ($2,061) and your deductible. Our 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 how much an at-fault accident may raise car insurance rates in your state. Consider that this increase may span a period of three to five years.
  3. Compare the out-of-pocket expenses to the rate increase you'd incur along with 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.

 


 

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
Liability-Only$672
$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 be covered if a driver without insurance or insufficient insurance coverage 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 on bundling insurance policies, see our guides below!

 


 

5. Consider 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, 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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Frequently asked questions: negotiating car insurance

How do car insurance companies set rates? 

Each state has different car insurance regulations to determine how rates are set. Your individual driving profile also contributes to how much you pay. Your driving record, address, type of vehicle, and — in some states — age, gender, and credit history are used to determine your rates. 

 

What details do you need to provide to get cheap car insurance quotes?

Because auto insurance rates are dependant on the individual profile of the driver, you will need to give certain personal details in order to get an accurate rate. This includes your age, address, type of vehicle, driving history, and, in some states, even your credit history. It’s important to remember that a quote is just a general idea of what you will pay. Underwriters ultimately set your rates based on the information you provide as well as your official driving record. In general, the more information that you can give, the more accurate your rates will be. 

 

How do I get free car insurance quotes?

You can get free car insurance quotes in a number of ways. One way of doing so is to reach out to insurance companies individually. After providing certain personal details, companies can give you an insurance quote quite quickly. A more efficient method is to compare many quotes at the same time. The Zebra allows you to get instant quotes from multiple carriers instantly.

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