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Is Auto Insurance Negotiable?

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Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency...

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Reviewed byJoel Ohman
Founder, CFP®

UPDATED: Mar 13, 2020

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Insurance Q&A: “Is auto insurance negotiable?”

Insurance advertising, like all other advertising, “pushes it to the limit,” going as far as possible without outright lying…

That explains the small print and fast talking at the end of the commercials, which all but negates everything they just displayed in large print and repeated slowly for the first 28 seconds of their 30-second commercial.

And so it’s quite possible that these sorts of advertising claims (Progressive Name Your Price) lead some of us to ask if “auto insurance is negotiable.”

The short answer is a resounding “NO.”

But that doesn’t mean there is only one rate available to every driver. The reality is you can always choose the types and amounts (liability limits) of coverage you want and your rate will adjust higher or lower accordingly.

For example, if you opt for a liability-only policy, it’ll certainly be cheaper than full coverage auto insurance, but with those savings also comes risk.

Additionally, the wide array of auto insurance discounts available today may also lower your auto insurance rate.

Why You Can’t Haggle

The answer to this question lies within how much the insurance industry is regulated. Fact is; every licensed insurance company must submit their rate proposals to a state run regulatory body (State Department of Insurance) and have them approved.

Once their approved, no changes can be made to those rates unless they request another review.

Basically, they propose a certain rate and must provide financial evidence to back up their proposed changes.

If an insurer wants to raise their rates, they have to prove they aren’t making enough money.

[How are car insurance rates determined?]

So if you happen to be granted a lower or higher rate than the “approved” rate and the state regulators get wind of it, the insurer would be in some serious hot water.

We’re talking potential fines or loss of a license in a particular state – that’s an overdramatic version of consequences, but certainly within the realm of possibility.

Flo, the GEICO gecko, and the actor from Delta Force really want your business, but we assure you that your $1,000 annual auto policy isn’t worth it to them to start trouble with the government.

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How You Can “Negotiate”

Even though you can’t “negotiate your rate,” you can shop around until you find the best quote.

You’ll want to start by shopping online and speaking with a local independent insurance agent to ensure you get the best coverage at the lowest price.

An independent agent will be able to shop your “profile” with several auto insurance companies and, more or less, allow the insurers to compete for your business.

Using a captive agent, such as those representing State Farm, will limit the number of quotes you get to just one (1).

The only way to get a lower rate in a captive agent’s office is to reduce or remove coverage or raise your auto insurance deductible. None of which are great options at insurance claim time!

Tip: How can I lower my car insurance rate?

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