Glossary

Mutual insurance company

An insurer owned by its policyholders rather than by shareholders, which can return surplus to members as dividends or lower rates.

Also called: mutual insurer, mutual

A mutual insurance company is owned by the people it insures. There are no outside shareholders; the policyholders are its members and, in principle, elect its board. State Farm, Nationwide and Amica are mutual companies, as are many regional insurers.

Because a mutual has no shareholders to pay, its profits are kept as surplus to strengthen the company, used to hold down rates, or returned to members as policyholder dividends. Dividends are not guaranteed and depend on the company's results. Some mutuals have reorganized as mutual holding companies, which can own stock subsidiaries and raise outside capital while policyholders keep control of the parent.

For a driver, ownership is one factor among many. A mutual is not automatically cheaper or better at handling claims than a stock insurance company; price, service and financial strength, as measured by an AM Best rating, vary company by company. Both types are regulated by the same state laws. Reciprocal exchanges such as Erie Insurance Exchange are a related but legally distinct form of policyholder ownership, run by a separate manager called an attorney-in-fact. See mutual vs stock insurers: does ownership matter?.

Last reviewed October 4, 2026

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Related terms

Stock insurance company An insurer owned by shareholders, who receive its profits, rather than by its policyholders; many are publicly traded. Reciprocal insurance exchange A policyholder-owned insurer in which members, called subscribers, insure one another through a manager known as an attorney-in-fact. County mutual insurance company A Texas insurer type, exempt from many state insurance laws, that many auto insurers use to issue their Texas policies. Policyholder The person or business that owns an insurance policy and pays for it, with the right to change or cancel it. AM Best rating A letter grade from rating agency AM Best on an insurer's ability to pay claims, running from A++ (Superior) down to D (Poor).

Related guides

Who owns whom: car insurance brands and their parent companies Which company owns each major car insurance brand, from GEICO and Esurance to The General, Dairyland, Bristol West and PURE, as of October 2026. Farm Bureau insurance: membership, eligibility and how it works How Farm Bureau car insurance works: the link between state Farm Bureau federations and their insurers, membership dues, who can join, and how to compare it. The 100 largest auto insurance companies in the U.S. Every one of the 100 largest U.S. auto insurers ranked by 2025 premiums from NAIC data, with market share, type, rating and a link to each profile. Mutual vs stock insurers: does ownership matter? How mutual, stock and reciprocal car insurers differ in ownership and where profits go, which big insurers use each model, and whether it matters. Regional car insurers: when smaller carriers can beat the giants Regional car insurers sell in one state or a few, often through local agents, and some top national satisfaction studies. How to find them and what to weigh.

Related insurers

Acuity Insurance Sheboygan, Wisconsin mutual in business since 1925 that sells business, home and auto insurance through independent agents in more than 30 states. Alfa Insurance The Alabama Farmers Federation's insurer, a Montgomery-based mutual selling auto through local agents in Alabama, Georgia and Mississippi since 1946. American Family Insurance Madison, Wisconsin mutual sold through exclusive agents in 19 states; offers DriveMyWay telematics and MilesMyWay low-mileage pricing. Sold The General in 2024. Amica The oldest U.S. mutual auto insurer, a policyholder-owned direct writer from Rhode Island that tops J.D. Power's New England satisfaction rankings. Arbella Insurance Quincy, Massachusetts, mutual founded in 1988 that sells auto, home and business coverage in New England exclusively through independent agents. Auto-Owners Insurance Lansing, Michigan mutual founded in 1916 and sold only through independent agents in 26 states, with strong claims scores and no general telematics program.