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Can you negotiate car insurance?

Fact-checked with HomeInsurance.com

Many variables affect car insurance rates. When a provider estimates premiums, it draws on information like location, vehicle type and personal driving history.

You can negotiate with dealerships when purchasing a car, and some mechanics may be open to negotiations as well to decide on the fair cost of repairs, so it may be assumed that insurance rates can also be negotiated.

However, the limitations of the car insurance industry may surprise you. In this article, we’ll examine negotiating car insurance rates and explain why it’s not an option or right.

Factors that affect your car insurance rates

The reason car insurance rates vary so widely is due to all of the different factors that determine the financial risk you pose to an insurance provider. A car insurance company may evaluate each customer differently, but the benchmarks for each evaluation will essentially remain the same. 

Here are factors that commonly affect car insurance rates:

  • Age
  • Gender
  • Location
  • Vehicle type
  • Vehicle cost
  • Driving history
  • Credit history
  • Desired coverage
  • Available discounts
  • Other drivers listed on the policy

Location in particular has a big effect on the price of auto insurance. For example, the average annual expenditure on auto insurance in Louisiana is $1,443.72, while the average in North Dakota is $659.94, according to data from the Insurance Information Institute.

The varying costs between states is a result of the different levels of risk each state poses for insurance providers. For example, some states are more prone to natural disasters, while other states experience higher levels of property crime on average. 

Auto insurance companies have all of these statistics on file and they play an important role in determining the policy’s risk, and thus, the policy’s cost.

When it comes to negotiating car insurance to get a lower rate, you may have an idea of how much auto insurance should cost, but that may not match the providers calculations based on risk factors. 

It’s not uncommon to want to negotiate with the car insurance provider, but the reality of the insurance industry is that these rates are largely predetermined, and the insurer has little say in the cost. 

Can you negotiate car insurance?

Unfortunately, legally you are not permitted to negotiate car insurance. According to the National Association of Insurance Commissioners (NAIC), federal and state governments regulate insurance industry prices. So insurers must follow the guidelines laid out by government legislation when it comes to pricing. 

Within those guidelines, insurance companies are able to draw on different factors—like those discussed above—to set their rates based on perceived risk. Because these risk factors are predetermined, the insurance agent working on your policy doesn’t have any flexibility to haggle over prices.

Although negotiating with car insurers is not an option, there are plenty of other ways to lower the cost of coverage or to find a lower rate. By comparing quotes from different companies and taking full advantage of the available discounts, you can get the best rate for auto insurance to fit your needs.

Ways to reduce your auto insurance costs

Auto insurance costs can add up fast. Thankfully, providers make it easy to reduce the cost of the premium. Here are a few of the methods commonly used to get a lower rate on car insurance.

Compare quotes

When shopping around for a new auto insurance policy, make sure to get quotes from a few different providers. After comparing rates from a few providers in the area, you should be able to make an informed decision on who offers the best service at an affordable rate. Because each provider varies slightly in which factors determine your rate, you may find a lower premium among multiple insurers.

File claims selectively

Before filing a claim, be mindful that doing so will probably result in a higher premium going forward. Every claim that’s filed goes on the policyholder’s record at the insurance company, although some companies do offer accident forgiveness. If the repairs are affordable, many people prefer to pay the expense out-of-pocket instead of filing a claim with their auto insurer, just to prevent having to pay a higher premium in the future.

Understand your coverage

Most auto insurance companies allow customers to choose which coverages they want to include in their policy, and some companies even allow people to choose the level of coverage as well. Liability insurance is cheaper than full coverage, but it also offers less protection. Make sure to keep your car’s value in mind, as well as your financial situation, when choosing coverages for your auto insurance policy.

Bundle your policies

One of the most common discounts in auto insurance is bundling policies, which means using a provider for another type of insurance besides auto, such as homeowners or renters insurance. If you purchase multiple kinds of insurance from one provider, the chances are greater that you’ll receive a lower rate on the combined policies.

Find discounts

In addition to savings from bundling, most auto insurers offer a range of other discounts to reduce the cost of auto insurance. Finding out which discounts you qualify for is a great way to receive a lower premium. According to the Insurance Information Institute, common auto insurance discounts include:

  • Antitheft Devices
  • Auto and Homeowners Coverage with the Same Company
  • College Students away from Home
  • Defensive Driving Courses
  • Drivers Ed Courses
  • Good Credit Record
  • Higher deductibles
  • Low Annual Mileage
  • Long-Time Customer
  • More than 1 car
  • No Accidents in 3 Years
  • No Moving Violations in 3 Years
  • Student Drivers with Good Grades

Consult FAQs

Providers know that auto insurance can be confusing, so most provider websites include a FAQ page. These FAQs are a great place to find out more information about how the provider prices its policies, including tips on discounts and how to get them. 

The takeaway: You can’t negotiate car insurance.

  • Car insurance rates are regulated by federal and state legislation and cannot be negotiated
  • Providers have set equations based on risk for how much a premium costs; these equations may differ slightly among providers
  • Alternative ways to lower the cost of car insurance include qualifying for discounts and comparing quotes

Trying to negotiate car insurance is like trying to negotiate an electric bill—regulations on pricing limit any discussion around changing the rate. Auto insurance providers’ hands are largely tied when it comes to the price of coverage, so negotiations are off the table. Instead, focusing on other ways to lower your premium will allow you to obtain reliable coverage at a rate you can afford.

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