Dividends: the Auto Insurance Benefit You Didn’t Know About

Some car insurance policies come with a terrific benefit that you probably don’t know about. These policies can pay dividends just like stocks in some companies.

The bad news is that not all auto insurance policies pay dividends, and there can be no guarantee that you can get the dividends. The good news is that there are some insurance companies that will pay dividends on auto insurance.reinvested-dividends

Mutual Insurance Companies and Dividends

Only certain insurers pay dividends, and the dividend-paying companies are known as mutual insurance companies. A mutual insurance company is owned by its policyholders. A good way to think of a policy in a mutual insurer is as a stock.
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Just as a company pays dividends on its stock when it makes a profit, a mutual insurer pays a dividend when it makes money. As with a stock, the dividend is only paid out when the company’s leadership decides to make the payment.

That means mutual insurance policies don’t always pay a dividend just as stocks do. The company will have to be making a profit, and its board of directors will have to vote to pay the dividend.

The amount of the dividend can vary widely, but it can be a pleasant surprise. Among other things, the dividend can save you money on insurance.

How Dividends are paid

Dividends on insurance policies are paid out in two different ways. Some companies send the policyholders a check or a payment for the amount of the dividend. Others will deduct the dividend amount from your policy.

That means dividends can save you several dollars a year on your car insurance. Buying a policy from a company that issues dividends can save you some money.

How to Tell if your Insurance Company Issues Dividends

The easiest way to tell if an insurance company issues dividends is to check its website. If the company is a mutual company, it should tell you somewhere on the site.

Something to remember is that some of the big national insurance companies are mutual insurance companies. Others are stock corporations or privately held companies that don’t pay dividends to policyholders.
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Buying a policy from a mutual insurance company can save you some money or make you some extra money in the form of dividends. Dividends shouldn’t be the only factor in determining what car insurance to buy, but you should keep them in mind.


Something else to remember is that smaller regional insurance companies are more likely to issue dividends than the big national companies. That being said, they aren’t always the best choice.

Most customers will be better off with a cheaper policy that doesn’t pay dividends. That way, you can have the money right now and put it in the bank.

Those who pay quite a bit in insurance might be better off with a policy that pays dividends. Persons who have a high rate or need to insure multiple cars can save a bit with a dividend.

Dividends are yet another of those car insurance benefits you’ve probably never heard of, and the possibility of dividends is yet another reason why you should shop around for car insurance and carefully research the policy before buying it.