How Car Insurance Dividends Work & How They Can Save You Money

Making regular car insurance payments is part of being a responsible driver. While you hopefully won’t need to file a claim, it’s important to know financial protection is available if you need to cover the costs of property damage or personal injuries. As a vehicle owner, you may look for opportunities to save on auto insurance where you can.

Having a good driving record helps you get the lowest premiums, but it’s also nice to see some of your payments coming back to you in time. Car insurance dividends are payments insurers make to policyholders when certain conditions are met. Understanding how they work helps you determine if this could be a cost-saving measure you want to explore when you set up a new policy. Keep reading as the experienced professionals from Altra Insurance Services, premier providers of car insurance Chula Vista drivers trust for affordable rates and unmatched service, offer details about these dividends.

Understand Why Insurers Provide Dividends

Insurance companies offer dividends to share a portion of their profits with policyholders who contribute to their success. Providing dividends to policyholders reduces the overall cost of policies, which can attract and retain more customers. Knowing a portion of the money they help their insurance companies save will be returned also helps drivers strive to do their best to avoid costly claims.

Consider the Average Amount You’ll Receive

Several factors influence the amount you can expect to see as dividends. Your insurance company will calculate dividends based on its annual revenue, investment returns, overall operating expenses, and claims paid out. Since this amount can vary from one company to another and among different years, it’s best to ask your insurance agent about the dividend history for your preferred company over the past several years.

Know When to Expect the Dividends

In California, insurance dividends must typically be paid on the anniversary date of the policy as long as you are up to date on paying the premiums. If you’re behind on your insurance premiums, you might not receive the full dividend you expect at your renewal time. For many people, seeing payouts around the same time they’re planning for insurance renewals can make the cost of their policies more affordable.

Determine How You Prefer to Receive Dividends

Insurance companies also tend to offer more than one way to receive a dividend. Some people prefer to receive checks that allow them to spend their dividends how they please. However, most people opt to have the insurance companies apply the dividends to their insurance premiums, which allows them to see savings throughout the upcoming renewal period.

Do Your Part to Keep Dividends Higher

Although dividends feel like free money, the truth is everyone contributes to the amount policyholders receive. Since claim payouts impact the amount insurance companies calculate for dividends, it helps to do what you can to minimize their costs. Making sure to follow all of the safe driving recommendations lowers your risk of needing to file a claim that impacts dividends over time.

If you’re looking for affordable, reliable car insurance and high-quality service, call on the experienced agents at Altra Insurance Services. We can help you with a wide variety of insurance options, including motorcycle, homeowners, and renters insurance. San Diego County residents should call one of our friendly representatives today.