Compare Car Insurance Companies That Pay Dividends to Policyholders [2021]

When trying to find quotes for car insurance companies that pay dividends to policyholders, you may be surprised how many mutual insurers offer policies. However, car insurance companies that pay dividends to policyholders offer many affordable policies that can provide additional earnings. Policyholder dividends are often under $100 dollars and aren't guaranteed each year.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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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, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 16, 2021

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Here's What You Need to Know

  • Many mutual companies provide dividend policies
  • They may judge performance based on a local region
  • The dividends will likely be less than $100

Getting policyholder dividends can be a great way to pad your premiums or spend on necessities. You can find car insurance companies that pay dividends to policyholders by doing research through a comprehensive car insurance guide.

If you’re looking for affordable car insurance companies that pay dividends to policyholders, enter your ZIP code into our quote tool.

Car Insurance Companies That Provide Dividends to Policyholders

There are a number of insurers that will provide dividend policies to their clients. Mutual insurance companies are funded and owned by their policyholders, so when the insurer does well, the customers receive a portion paid out to celebrate that success.

Car insurance companies that pay dividends will often declare an amount and then split that up amongst the qualifying policyholders. Some examples of these insurers include:

  • Liberty Mutual
  • State Farm
  • Progressive

There are a number of car insurers that pay policyholder dividends maybe even a local insurer that isn’t available nationwide. Doing the proper research will ensure you find affordable car insurance companies that pay dividends to policyholders.

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What are policy dividends?

A policy dividend is an annual payment to policyholders on behalf of an insurer after they have had a successful year. If there have been lower claims in that area, the insurer will provide this financial incentive to keep its drivers driving safe on the road.

Mutual insurance companies are funded by their policyholders, and so when the car insurance company does well, it passes that on to its drivers.

While stock insurers are companies that don’t pay dividends to policyholders, it’s similar to when a stock company rewards its investors after a successful year. Although, admittedly, policyholders at a mutual company will earn less.

How much do car insurance dividends pay?

Car insurance dividends aren’t going to pay off your car insurance policy. However, they can be put toward your monthly premiums or be used for anything else you may need.

Recently, State Farm of California awarded $400 million of dividends, which came out to around $100 per person. This price seems to be pretty commonplace, with a number of customers from other insurers remarking online that they’ve received roughly similar payouts.

It’s not a life-changing amount of money, but it’s money back on your policy that you can use however you want. It’s not guaranteed, but according to the Insurance Information Institute (III), the Covid-19 pandemic has caused car insurance dividends to soar.

How to Get Dividends From Your Insurer

To get dividends from your insurer, you’ll want to make sure you are looking for insurance at mutual insurance companies. These are the insurers that will provide a policy that has the potential to provide dividends.

After you get your policy, you’ll want to make sure you avoid any accidents or filing any claims. The better everyone in your local area drives and the fewer claims filed, the more inclined your car insurer will be toward giving policyholder dividends.

Research the insurer for the best results.

To make sure you get the right policy that has real dividend potential, you’ll need to make sure you research your potential insurer. There are a couple of factors you can look at:

  • Recent dividend history
  • Current and past financial holdings
  • Company and customer reviews

When researching mutual insurance companies, it’s also worth looking at non-mutual insurance companies to see if you’d rather get a policy with a stock insurer.

Rates for car insurance companies that pay dividends to policyholders are likely higher than their stock insurance counterparts.

Compare Mutual Insurance Companies

There are a number of mutual insurance companies on a national level, in addition to regional car insurers that provide policyholder dividends. These insurers will likely offer different policies with varying rates.

Some insurers allow drivers to invest their dividends into a new savings account that can work as an investment and accrue cash value over a period of time.

Mutual vs. Stock Insurance Company

A mutual insurance company is a type of insurer funded by its policyholders, who each hold an interest in the company’s success. The mutual insurance company’s goals are to make enough money through its policyholders to be able to fulfill its financial requirements.

A stock insurance company can be publicly or privately traded by its shareholders. This insurer is intent on maximizing the profit for its shareholders, who help the insurer fulfill their financial responsibilities in addition to policyholder premiums.

Investment and Risk

A mutual insurance company earns money to fund its financial responsibilities through its clients, who face no inherent risk or potential investment gain from their policy. If the insurer has surplus wealth for one year, it may decide to split that up amongst the policyholders.

With a stock insurance company, the insurance company is funded through its policyholder premiums, but they are also able to generate stock to create additional income. This is a benefit that it holds over the stock insurer, but also poses a greater risk for an investor.

That being said, a stock insurer provides more stability overall due to the insurer’s ability to generate new income in case one other method becomes less reliable for some reason.

The stock insurers are more of a high-risk car insurance investment, not guaranteed to make anything.

Ownership

A mutual insurance company is owned by its policyholders; they even have a choice over who makes up the insurer’s board of directors. This provides the policyholders with control over the insurer’s, and therefore their policy’s, future.

A stock insurance company is owned by shareholders that either trade it publicly or privately. In this way, the policyholders don’t have any control over who makes up the companies’ leaders and are at the whim of the shareholders.

The mutual insurance companies’ policyholders benefit the most from this freedom, as they get to decide who is working toward providing a better future for their policies.

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Car Insurance Companies That Pays Dividends to Policyholders: The Bottom Line

There are a number of mutual car insurance companies that offer policyholder dividends. Do your research and ensure the company has a strong enough financial record to provide dividends and you’ll be receiving a payout in no time.

If you’re looking for quotes from car insurance companies that pay dividends to policyholders, enter your ZIP code into our free quote tool below.

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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