How to get paid car insurance dividends

With the right provider, you could get extra cash just for being a policyholder.

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After budgeting for car payments, gas, maintenance fees and other monthly expenses, the cost of car insurance can be a bit of a shock. To help you cut insurance costs, you could find a provider that pays car insurance dividends, which are payments for being a policyholder.

Compare your options from top-rated mutual companies to find a company that’s willing to pay you for taking out a policy.

How do insurance dividends work?

A dividend is a payment from a mutual company to its shareholders as a distribution of its profits. Basically, it means that when the company makes a profit, you get paid just for owning a policy.

Mutual insurance companies differ from standard insurance companies because they’re owned entirely by shareholders as opposed to stockholders. If your car insurance provider is a mutual insurance company, you’re considered a part-owner when you take out a policy. And as a part-owner, you’re entitled to a share of the profits. At the end of every fiscal year, the company releases its earnings, then send you a check for your share.

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Enjoy premium perks like better car replacement and accident forgiveness plus local agent support.

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How much could I get paid in dividends?

You might receive between $50 and $100 in a profitable year. It’s hard to say exactly how much you’ll get paid in dividends, since payments can vary depending on factors like:

  • Frequency. How often you’ll get a payment can vary, but most car insurance dividends are paid yearly.
  • Dividend ratio. Companies decide how much of their earnings will be distributed to shareholders and how much is retained and put towards growth.
  • Company earnings. The more a company earns, the more you’ll receive in dividends. however, if a company has a bad term, you’ll likely receive less.
  • Share of ownership. Companies pay dividends by the share, so the more shares you own, the more money you receive.
  • Liquidity. If a company’s earnings are tied up in investments rather than cash, you may receive a smaller dividend so that the company has more cash to spend.

Which car insurance companies offer dividends?

The easiest way to find which companies offer dividends is to look for companies that are considered mutual insurance companies. Here are just a few:

Find more mutual insurance companies

Are there any risks with dividends?

While there aren’t necessarily any risks with dividends, there are a few things to watch out for:

  • Small payouts. Dividend payouts are not always substantial, so you shouldn’t expect a massive paycheck.
  • Higher premiums. Companies that pay dividends might charge higher premiums to make up for it, so you may end up paying more for insurance.
  • Demutualization. Demutualization is when a mutual insurance company decides to become a stock insurance company. If this happens, you won’t have a share of the company or receive dividends any more.
  • Profits not guaranteed. Mutual insurance companies can choose not to declare dividends at the end of the fiscal year.
  • Policy terms. You won’t receive dividends unless you’re a policyholder on the date your insurer declares dividends. So if the company declares dividends in January and you purchase a policy in February, you’re out of luck.
  • Subsidiaries don’t pay out. Not all mutual insurance companies pay dividends. And if you’re insured by a stock insurance subsidiary of a mutual insurance company, it’s unlikely you’ll receive anything.
  • Dividends optional. Some providers allow you to choose a dividend or standard insurance policy. So if you want to receive dividends, you’ll need to make sure your policy offers them.

Bottom line

If you can find a car insurance provider that offers dividends, you could offset the expensive car premiums.

Not all companies offer them and the actual payouts can vary, so it’s important not to choose coverage based on dividends alone. Whether you decide on a mutual company or not, compare your options to find a provider and policy that meet your needs.

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