Should you buy auto insurance stocks right now? Expert’s Advice


If you drive a car or plan on purchasing one, you must be aware of the importance of auto insurance. In almost every state in the US (except New Hampshire and Virginia), you need to get a liability insurance policy to drive a car legally. Car dealerships won’t give you the car even if you have paid for it if you don’t have a proper liability insurance policy. If you live in one of the 12 “no-fault” states, you’ll have to get a personal injury protection plan as well.

These were the mandatory auto insurance policies. Then there are the important optional policies as well. For example, collision and comprehensive auto insurance policies are extremely important and popular. So from all that we can see and extrapolate, as long as there are cars on the roads, there will be insurance companies as well.

According to the NAIC, nearly 215 million drivers carry auto insurance policies in the US, making it one of the largest industries in the world. We all know that auto insurance can be expensive. But what if there was a way you could make money from the very same profitable auto insurance company that sells you car insurance?

It might sound impossible, but there is a way you can make money from your auto insurance company and help take the weight off those expensive auto insurance premiums. This article will describe how you can buy stocks of auto insurance companies and make a good profit. Let’s get started.

A Growing Market

The entire point of buying a company’s stocks is only profitable and sensible if you know that the company is growing, and so are its stock prices. A failing company means stock prices that nosedive into oblivion. But how do we know which companies are going to make it and which companies are going to be history?

It all depends on the stability of the industry. The auto insurance industry (along with other insurance industries) is going to stay. The automobile industry will go on, and as long as cars are being driven around, be it by human drivers or automated machines, a need for auto insurance is always going to be here.

This isn’t just speculation. According to the NAIC, there was a 5% increase in the sales of auto insurance policies from 2017-2018 and a 1% increase from 2018-2019. After the pandemic and the world reopening its asphalt roads for cars, the need for auto insurance is going to shoot up. The automobile market is predicted to grow at a significant margin. If the number of cars on the roads increases, so will the number of auto insurance policies.

Even if the industry shifts from gas cars to electric cars, the auto insurance market will still go strong. We might even see new auto insurance policies such as “battery pack coverage” or perhaps a range extender (in place of roadside assistance). The bottom line is this; stock prices of auto insurance companies are on the rise and will be for the coming years. So perhaps the safest place you can invest your money would be these companies.

Companies to Invest in

While there are so many auto insurance companies to choose your policies from, the number of public companies on the NYSE is limited. There are only a handful of options to choose from. Here are all the auto insurance companies available on the NYSE:

  • Progressive
  • Allstate
  • Metromile
  • Kingsway Financial Services
  • Donegal Auto Insurance
  • Towne Bank
  • Mercury General Corporation
  • Safety Insurance Group

You can look at their record, expected growth, and other metrics and invest smarty. With great dividends and yields, you won’t be feeling too bad while paying insurance premiums since you know that as you pay, you’ll get back a sizable chunk of your money back through the investment.

While you invest your money properly in the right place, you should also make the right purchase when it comes to auto insurance policies. Here’s all the important information you need while getting auto insurance.

Get Policies with Sufficient Coverage Limit

Each state has its minimum coverage limit. This is the maximum amount of money your auto insurance should pay in case there’s an accident, and it is your fault. While most people get liability coverage, they stick to the state-prescribed coverage limit.

The issue here is that your coverage limit should be more than what the state’s limits are. Accidents are very expensive, and if your liability coverage is lacking, you’ll have to pay the remaining amount from your pockets.

Skip Optional Coverage for Old Cars

If you are using a really old car, like over the age of 8 years, then it is better that you skip collision and comprehensive coverage for it. The reason is old cars do not cost that much to repair. So if you get collision or comprehensive coverage, you’ll first have to pay the price of the policy, then those costly insurance premiums, and that’s not the end of it.

If you crash your car and make an insurance claim, first you’ll have to pay the deductibles, and then you get the insurance amount. But again, that’s not all. Making a collision or comprehensive insurance claim increases the future rates of your auto insurance policies. So not only do you have to pay:

  • The price of the policy
  • Insurance premiums
  • Deductibles

But also pay more for the same auto insurance policy when you might need it when you buy a new car. It is just not worth it. You are better off paying for repairs from your pockets. It might sting a little, but you’ll thank yourself later for not making an insurance claim.

And that was all about the auto insurance stocks you should buy and the things to keep in mind when purchasing policies.


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