Negotiating With Car Insurance Companies

You don’t have to wait until your insurance policy expires or you buy a new car to shop around for new auto insurance.   You can switch insurance providers at any time and they are required to refund a prorated amount based on premiums you paid for coverage past your your termination date.

And when you do go shopping for a new car insurance policy, it pays to shop around and negotiate with car insurance companies.  

Negotiating Car Insurance Prices with a Car Insurance Company

 The major reason people overpay for car insurance is their complacency with slow/prolonged “price creep”.

For example, imagine you initially purchased car insurance for your family in 2000 and at the time you were paying $1,000 every six months. Your rates were systematically increased $50 every six months, and that this is something you have long accepted as a matter of course. It’s now 2011 and you’re paying $2,100 every six months.  With inflation you should probably be paying $1,400 instead of $2,100.

This kind of thing happens to people with car insurance prices all the time, and this leads us to the first thing you need to do in order to cut your car insurance bill: take a step back and stop assuming you are currently being charged a fair rate.

Shopping Around for Car Insurance

Before you can negotiate with your current provider, you need to shop around and see what else is out there.  It’s easy to get multiple car insurance quotes online. Get competitive offers from Esurance or Geico. When you get quotes, just make sure that you get comparable coverage for each price inquiry, otherwise you won’t be able to fairly compare prices.

Follow-up Calls to Negotiate Car Insurance

Now you have the opportunity to follow-up with a call to try to lower the quoted prices even further. Before you make any calls, be sure you have all the quoted prices in front of you. Also, make note of what you want to accomplish:

  • Will you be willing to increase deductibles to save on price?
  • What types of protection are most important to you?
  • Are you going to argue for a lower price or higher policy limits/other perks?

Car insurance companies are tough to negotiate with and use computer model algorithms in order to set your price. That said, most companies will weigh your positives/risk factors differently. Here are three tips for negotiating with car insurance providers.

  1. Only spend time talking to trusted, quality insurance companies like the ones mentioned above.
  2. Find out if the car insurance company has a discount program that the automated system did not include in your quote, and then finally:
  3. Work on negotiating down your final price using traditional negotiation techniques.

Step 1: Use a Reputable Company

The price of an auto insurance policy is important, but it is not the only factor.  You need to find a mix of low cost and high quality, so go with a brand you’ve heard of like Esurance, Geico, or AllState.  Not all insurance companies are created equal and if you go with a less reputable company, you may end up suffering in the long run with poor customer service or problems with adjustors and claims.  Limit your negotiations to those companies you know provide a reliable service.

Step 2: Ask about Discounts and Programs

Every company has their own distinct discounts and programs. Ask the customer service rep which discounts you may have overlooked.  Some common discounts are offered for safe drivers, certain associations or groups, good grades, or qualifying your vehicle for personal use only.  Also, be aware of how other factors can affect your premium like your education level, your job type, age, sex, credit score, and even whether you rent or own your home.

Programs are different from discounts as they usually require you doing something extra. Such programs might include money off for completing a driving safety course. Remember, this is not classic “negotiation” so much as trying your best to make sure you take advantage of every program or offer each car insurance company has at their disposal. Many of these programs will not be advertised and you may have to ask if they are available. Other items to ask about are discounts for anti-lock brakes, car alarms and multi-policy discounts (like home and auto through the same provider).

Step 3: Final Car Insurance Purchase Negotiations

By now the sales representative is invested in the sale. He or she has already been asked a ton of questions by you. You have also politely forced the car insurance representative to exert a lot of time and effort going over all of the different programs and discounts. By now they should be able to offer you a price that is better than the quoted price. Now is the time to go in for the kill in the most polite way possible.

Hopefully you have developed a good rapport. If the other party likes you there is a better chance they will do what they can to get you a good deal and finalize the insurance purchase. This is particularly true if the other person you are talking to does not operate on a commission basis. Now is also the time to mention if you have legitimately received better offers from rival car insurance companies.  Here’s an example of what you might say in this situation:

“______(rep’s name here), I really appreciate you taking the time to go over everything with me. I know you understand it is an important decision to me, but I can’t justify getting a policy through you when company X  is offering a comparable policy for $cheaper.  Is there anything else you can do to beat their price? If you can I believe we could finalize a deal right now.”

Negotiating With Car Insurance Companies: Conclusion

As a final note, the great thing about saving money on car insurance is that you will end up with the same product for a lower price.  As long as you use a reputable company, there is little difference between providers if you switch.  And if you do find a lower price, you could also try a call back to your current provider and see if they will beat the quote before switching and save yourself the extra paperwork and a few bucks at the same time.