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For most vehicle owners, car insurance is a necessary expense. It is understandable to want to find the cheapest coverage possible, but haggling with your company will not help you lower your premium. Car insurance prices are not negotiable. However, understanding what sets insurance rates might help you find a more affordable price. Although your premium is not negotiable, a lower car insurance rate may be available to you by using one or more cost-saving tips.
Can you negotiate car insurance?
Many people ask, “Are car insurance rates negotiable?” Drivers often wonder if they can present their insurer with a lower quote and have their coverage price-matched. The answer is clear-cut: No, you cannot negotiate a lower car insurance premium. To understand why this is the case, you need to know a bit about how car insurance rates are determined in the first place.
Each year, car insurance companies submit rates to the Departments of Insurance in the states where they operate. These rates make up the algorithm that companies will use to price policies and determine how heavily the companies will weigh your various rating factors. These factors can include your age, ZIP code, driving record, marital status, homeownership status, type of vehicle and, in some states, credit score. Your past coverage history and lapses in your coverage also have an impact on your car insurance premiums.
For example, one company might penalize you more heavily for a ticket than another company. Once rates are approved, insurance companies cannot change their rating metrics for another year. This is why rates are not negotiable; your policy is rated through a given company’s proprietary algorithm, which has to be approved by the state regulating agencies.
Ways to lower your car insurance bill
If you are wondering how to negotiate car insurance, you now know that you cannot haggle a lower price. However, there are other ways that you can save on your premium that might help you get cheap car insurance.
Because each car insurance company sets its own rates, the premium for the same coverage will vary between companies. When you are seeking the most affordable price, comparing quotes and coverage options from multiple providers is one of the most trusted methods to see which company can offer you the lowest premium.
Take advantage of discounts
Most insurance companies offer discounts that can help to lower your premium. Discounts will vary from one provider to another, but there are some common savings opportunities that many providers offer. Some of the most popular car insurance discounts include:
- Multi-policy:This discount is awarded for buying more than one policy from the same company. The most common package is an auto and home discount, but some companies offer savings for buying other lines of insurance, like life or business policies.
- Multi-vehicle: If you have more than one vehicle, insuring them with the same company might save you some money.
- Safe driver: Having a clean driving record, which typically means you have no accidents, tickets or DUI convictions in the past several years, can help you avoid premium surcharges.
- Vehicle safety features: Insuring a car with safety equipment like side curtain air bags, anti-lock brakes or an automatic braking system to help avoid forward collisions often means you will pay less for insurance.
Other common discounts include savings for good students, students at college without cars, participating in a telematics program or signing up for paperless billing. Reviewing a company’s discounts and taking advantage of as many as you qualify for can help you fit your car insurance premium into your budget.
Drive an affordable car
The type of vehicle you own has a significant impact on your car insurance cost. Vehicles that cost more to repair or replace, have limited safety features or have a higher statistical likelihood of accidents typically cost more to insure. When buying a vehicle, it is generally a good idea to get an insurance quote before finalizing the purchase. That way, you know the cost for coverage and can decide if the vehicle makes long-term financial sense for your situation.
Frequently asked questions
What is the cheapest car insurance?
The cheapest car insurance will be different for each individual because everyone has a different situation to consider. The company you choose, the coverages and limits you purchase, the car you drive and your driving record will all impact how much you pay. Getting quotes for the same coverage from several different insurance carriers might help you find a price that fits your budget.
Are insurance costs higher after a driving incident?
Car insurance premiums do typically increase after incidents like accidents, tickets and DUI convictions. After these incidents, insurers view you as more likely to file a claim in the future, which means you might be rated as a high-risk driver. You will typically be penalized for these incidents for three to five years, although this can vary by carrier.
How much does car insurance cost?
The average cost of car insurance in the U.S. is $1,674 per year for full coverage. The state you live in plays a large role in how much you will pay, as do other factors like your driving history and the company you choose.
Does car insurance increase every year?
Your car insurance premium likely will not stay the same each year. Car insurance companies submit new rates each year and this can affect how much you pay even if nothing else on your policy changes. The way a company reviews your rating factors changes each year with these new rates, so your premium could go up or down. In addition to your individual rating factors, your premium could be affected by changing state laws, the likelihood of claims in your area and how much a company paid in total claims in the prior fiscal year.