Best Auto Insurance Companies That Pay Dividends to Policyholders (2021)

When trying to find rates for auto insurance companies that pay dividends to policyholders, you might find yourself with a few questions. However, finding affordable auto insurance companies that pay dividends to policyholders might take some research. With the right car insurer, you can start making $100 dividends within the year.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Sep 16, 2021

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Things to Remember

  • Mutual insurers offer dividends to policyholders
  • The dividends will likely be less than $100 a year
  • You will only receive them if the insurer does well

When you’re continuously putting money into an auto insurance policy, you may want to see a return on that investment. If so, contacting car insurance companies that pay dividends to policyholders might be your best bet.

While a bit more pricey, there are still cheap auto insurance rates available for safe drivers.

If you’d like to find quotes for auto insurance companies that pay dividends to policyholders, then enter your ZIP code into our free quote tool to get an idea of what you might pay.

Auto Insurance Companies That Offer Policyholder Dividends

Not all insurers will give out payments on insurance policies, but not all insurers are owned by their policyholders either. If you’re looking to get policyholder dividends, then you’ll want to focus your search on mutual insurance companies.

Mutual car insurance companies are owned by their policyholders, so it follows that the policyholders should also succeed when the company does. Dividends will be higher or lower depending on the level of success. For the best results, you should go to an insurer that has a proven history of quality dividends.

Some examples of companies that currently offer dividends include:

  • Farm Bureau
  • Amica
  • Liberty Mutual
  • State Farm

State Farm Mutual was able to issue $400 million to its car insurance customers in California as of March 2021. This is due to better than anticipated claim results, and each customer is expected to receive $100 per policy.

The State Farm dividend history is a strong asset in proving its policies are worth sticking around for. According to the Insurance Information Institute, this could be in response to the COVID-19 pandemic.

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What are policy dividends?

In insurance, dividends are an annual payment made out to either policyholders or shareholders. In mutual insurance, the insurance company is owned by its policyholders, so they take the place of a stock insurance company’s investors.

Each year the insurer will send out a payment if the company has done well in the last year. On the other hand, if your insurer hasn’t done well in the same period, you likely won’t receive anything at all.

All the dividends payable to a policy owner are declared by the insurance company and then split up amongst the recipients.

How to Get Dividends From Your Insurer

The most important thing to do is to look for a mutual insurance company that offers the kind of auto insurance you’re looking for. See if any of the above companies offer policies in your area and get in contact with an agent.

You’ll also want to make sure that you properly research things like:

  • The company’s recent financial history
  • If the company evaluates dividends locally or nationally
  • What past dividends have been given to customers

If you want to receive dividends shortly after starting your policy, it would be a smart decision to know how the company handles its finances. If it hasn’t been doing well, then it’s much less likely that you’ll get dividends anytime soon from that insurer.

If you live in a state that has a history of low claims, then you’ll likely see more dividends over the life of your policy. This is because the best drivers in the U.S. by state are often less likely to need to file a claim. When a state has fewer claims, the insurer has more money to pay towards dividends.

How Much You Will Receive in Dividends

Unfortunately, it’s likely not going to be much. Even State Farm’s $400 million dividends across a single state led to most people getting $100 per policy. While this is still nice, it’s not guaranteed at all.

Still, the money can be used for things like groceries, gas, or even to pay monthly premiums. Some insurers will also allow the policyholder to put the dividends into a savings account that works as an investment and will increase at a steady rate over time.

Pros and Cons of Policyholder Dividends

There are several benefits to insuring with a mutual insurance company, but there are also some negative aspects to watch out for. As with all insurers, whether or not this type of insurance suits you will largely depend on your needs, income, and other life factors.

One of the biggest benefits of insuring with a mutual company is that the policyholder now has a stake in the success of the company and they will be rewarded when it does well.

Some of the other benefits of mutual insurance with policy dividends include:

  • Receive dividends when your insurer does well
  • Options to invest those dividends
  • Extra value on your auto insurance policy

However, there are also some drawbacks that the client will need to weigh based on their circumstances. Some of these might include:

  • Higher premiums
  • No dividends when the insurer does poorly
  • The dividend payments won’t be very high

The dividends that an insurer gives out aren’t likely to be anything astronomical, usually ranging somewhere below $100 a year. The dividends shouldn’t be your only reason for getting a mutual policy, as you’re guaranteed to lose more than you make.

Mutual vs. Stock Insurance Companies

The main difference between a mutual and stock car insurance company is the people who fund them. Stock auto insurance companies don’t pay dividends to policyholders.

Stock insurance companies are funded by stocks on the market and people that might not be policyholders. However, with a mutual insurance company, the company is owned by its policyholders.

When a company does particularly well, either stock or mutual, it will send out a payment to its investors to commemorate that. In the case of mutual insurance, a large payout is dispersed amongst the hundreds of thousands of clients, making the payouts significantly smaller.

A stock insurer’s investors will likely receive higher dividends that are based on the number of shares they hold. Whoever owns the most of the company’s stock will receive the biggest payout from the business’s success.

Both of these types of insurance companies offer benefits, but there are limitations for each as well. A stock insurer’s policyholder is just a customer, and a mutual insurance customer doesn’t have much say over the company’s makeup, for example.

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

The potential for passive income is enough to make anyone stop and consider the options. With a mutual insurance company, you have the opportunity to see a yearly return on your policy. While it won’t be near what you pay in premiums, it’s good to be a part of your insurer’s success.

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

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