Nothing in life is free. But is there such a thing as free car insurance?
Surprisingly, some people have managed to find offers for car insurance at no direct cost to themselves—or at least, no immediate direct cost.
Keep reading to learn about whether free car insurance really exists and whether it's worth it.
Does Free Car Insurance Exist?
The nationwide average car insurance premium is around $1,000 for individual coverage, and it can cost a lot more or a lot less depending on the type of vehicle you’re insuring and your personal driving history.
In some states, the government offers free or reduced-price car insurance for individuals and families who are experiencing trying economic circumstances. Because these programs are well-regulated and going to the neediest individuals, they are not motivated by the same profit margins as most offers for free insurance, and thus not the focus of our present discussion.
However, if you are a low-income individual or curious about your city’s available programs, it is worth reading about the government-sponsored car insurance for low-income families in your state.
On rare occasions, you’ll see an offer for free car insurance from a car manufacturer. Since many states prohibit this practice, you definitely won’t see this advertised nationwide, but you might see it locally.
What Is the Catch?
This one’s easy: If you “buy” free car insurance—"opt-in" would be a better way of phrasing this—you will likely not be able to choose the company you will be insured by or the type of auto insurance coverage. You will likely be offered only the minimum legal coverage for your state.
Of course, like any agreement, you must read the fine print of the agreement before signing on the dotted line.
There is something else you have to know about “free” car insurance: If you are purchasing your vehicle with a loan, you can likely kiss the offer goodbye.
This is because, when you finance a car, the company who loaned you the money technically owns the lion’s share of the vehicle when you purchase it. They want to protect their asset in the event that you or someone else destroys it. For that reason, minimum coverage insurance is not going to fly with them.
Why Do Companies Offer This Deal?
Even if you do not end up taking the offer, just seeing such an enticing thing advertised might get you in the door of the dealership or considering the manufacturer’s brand of vehicle.
But additionally, if the manufacturer offers free insurance, they get to control what type of insurance you get—which means that they can custom-tailor your coverage to suit their interests. This is not an ideal arrangement.
Such a promotion could also foster brand loyalty and make you more likely to purchase that type of vehicle again in the future, though this may be a less compelling argument.
Should I Accept the Offer of Free Insurance?
In most cases, a cash rebate, extended warranty, or lower insurance rate on a dealer or manufacturer-financed vehicle is much more valuable than a year of free insurance.
If you are offered free insurance, ask about getting a cash rebate or one of the aforementioned options instead. Though it is unlikely that they’ll be extremely pleased with your negotiation skills, you never know—it might end up saving you a lot of money and hassle.
How Else Can I Save on Car Insurance?
While taking a free insurance offer is not typically the best idea, it does pay to comparison shop and do a lot of research by getting free insurance quotes as well as speaking to family and friends.
Once you find a good car insurance company, sticking with them may help you get more discounts in the future. If you’re in school, being a good student can provide discounts as well. And, of course, being a safe driver can lead to your insurance premiums steadily decreasing. It may not be as enticing or instantaneous as free insurance, but it’ll pay off more in the long run.