How to get paid car insurance dividends | finder.com
How to get paid car insurance dividends

How to get paid car insurance dividends

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

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.

What’s a dividend?

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. By purchasing a policy from a mutual insurance company, you become a shareholder, so you’re entitled to a share of the company.

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How do car insurance dividends work?

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.

How much could I get paid in dividends?

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

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Name Product Roadside assistance New car protection Available states
Allstate
Included free
Yes, cars under 2 years old
All 50 states
Enjoy having your own dedicated agent to help you get the best discounts and coverage.
Liberty Mutual
Optional
Yes, cars under 1 year old & 15,000 miles
All 50 states
Car insurance through Liberty Mutual will give coverage options for almost any situation.
Root
Included free
No
AZ, AR, DE, IL, IN, IA, KY, LA, MD, MI, MS, MT, NM, ND, OH, OK, OR, PA, TX, UT
Root offers simple, affordable insurance that’s ideal for good drivers. Try the Root app for 2 weeks and see how much you could save. Available in 20 states.
Esurance
Included free
Yes, cars under 1 year old & 15,000 miles
All states except AK, DE, HI, MT, NH, VT, WY
Esurance offers a modern online and mobile experience that helps you take your insurance on the go. Available in 42 states.
Metromile
Optional
Yes, cars under 1 year old & 15,000 miles
AZ, CA, IL, NJ, OR, PA, VA, WA
Drive less than 30 miles a day? Save on the coverage you need with pay-per-mile insurance from Metromile. Get a low monthly rate then pay just a few cents per mile. Available in AZ, CA, IL, NJ, OR, PA, VA and WA.

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Are there any risks with dividends?

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

  • Dividend payouts are not always substantial, so you shouldn’t expect a massive paycheck.
  • Companies that pay dividends might charge higher premiums to make up for it, so you may end up paying more for insurance.
  • 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.
  • Mutual insurance companies can choose not to declare dividends at the end of the fiscal year.
  • 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.
  • 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.
  • 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.

Find the cheapest rates

Compare the best car insurance companies near you.

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Frequently asked questions

Peter Carleton

Peter Carleton is a writer at finder.com who specializes in credit cards, life insurance, mortgages and more. In his free time, you can find him cooking, writing or honing his skills in WordPress development.

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