Best Car Insurance Companies
Car insurance is a crowded market. There are hundreds of auto insurance companies out there and thousands of different policies and plans. How do you know which to choose?
Read on as we answer these questions.
We have created a list of the 10 best car insurance companies in the United States, plus together a comprehensive guide explaining the different types of car insurance available and how to choose the right one for you.
Best Auto Insurance Companies
When putting together our list of the best car insurance companies, we have only chosen auto insurance companies with an “A” AM financial rating and a minimum of ⅗ on the J.D. Power Claims Satisfaction score.
|Product Name||3 To 5 Features||Best For…||Link to Product|
|Allstate|| ||Best for national coverage||Visit Site|
|Amica|| ||Best for customer service||Visit Site|
|Erie|| ||Best for young drivers||Visit Site|
|Farmers|| ||Best for customization||Visit Site|
|Geico|| ||Best affordable insurance||Visit Site|
|The Hartford|| ||Best for older drivers||Visit Site|
|Nationwide|| ||Best for conscientious drivers||Visit Site|
|Progressive|| ||Best for high-risk drivers||Visit Site|
|State Farm|| ||Best for full line insurance||Visit Site|
|USAA|| ||Best overall||Visit Site|
Why Do You Need Car Insurance
Taking to the roads without car insurance is basically an accident waiting to happen. Not only is some level of car insurance mandatory in all states, but car insurance can be a lifeline when you are involved in a car accident.
In the best-case scenario, you can find yourself without a vehicle for a few months as you save for repairs. In the worst-case scenario, you can find yourself facing bankruptcy as you lose your job due to loss of transport, and struggle to cover liability costs for the other driver and medical costs for both you and the other driver.
While paying monthly premiums can feel like pouring money into a black hole, it is in fact insuring you against the unknown. The nature of accidents is that they are unpredictable, but that does not mean they are uncommon. There are six million car accidents in the United States each year, and 90 people die every day in the US from motor vehicle accidents.
Types Of Car Insurance
There are five types of car insurance, all of which offer different types of coverage.
This type of insurance will cover your liability if you are found to be at fault for an accident. This type of coverage is mandatory in most states. It will cover:
- The repair and replacement of the damaged property of the other party involved in the accident, known as the third party
- Any medical costs incurred by the third party as a result of the accident
You will have a deductible that you will need to contribute before your insurance company pays out, and you will also have a maximum amount that your insurer will pay. This will vary depending on the details of your policy and the rate of your premiums. Most states have a minimum level of liability set by law.
This will cover damage to your car if you are at fault in an accident with another driver or have a single-car accident, such as hitting a post. The same principles of a deductible and payment limit apply. The limit is usually set by the overall value of your car.
This insurance is not compulsory, though it may be required by a lender if you have a financed or leased car.
Medical Payments Coverage
Medical payments insurance will cover the cost of any medical treatments needed by you or any passengers in your car as the result of an accident. This type of insurance is required in some states but not others.
Personal Injury Coverage
Personal injury coverage is only available in some states and is very similar to medical payments converge but more far-reaching. It also covers expenses associated with the accident, such as child care expenses or lost income.
Uninsured Motorist Protection
If you are in an accident where someone else is responsible, ideally their insurance should cover your medical and repair expenses. Unfortunately, many drivers take to the road without insurance or drive off after an accident (known as a hit and run) to avoid being held responsible.
Uninsured motorist protection will help you pay your medical bills in the case of such an accident and can also cover repairs to your car depending on the level and type of uninsured motorist protection you take out.
This coverage can also help if you are hit by an underinsured driver, whose insurance policy will not cover the full amount of your costs because it is above the maximum of the other driver’s policy. This insurance can help to make up this gap.
To learn more read: What happens if my car gets hit by somebody who doesn’t have insurance.
Comprehensive coverage does what it says and pretty much covers you for everything. It includes all of the above insurance coverage plus will also cover you in the case of weather damage, fire, or theft.
Most policies are limited to an individual driver for an individual car. If you want to register more than one driver for a car, or more than one car for a driver, charges will be added to your policy.
While these are the standard insurance types, a number of insurance companies will offer add-ons that may or may not be important to you.
- Transportation expense coverage – this will reimburse you for car rental costs while you are waiting for your car to be repaired or replaced
- Gap coverage – helps you pay off your car loan if your car is stolen or written off as a total loss
- Towing and labor Costs – while towing can be included in coverage for some collisions, if you find yourself in a position where you need your car towed, such as a breakdown, this will cover your towing
- Sound system coverage – if someone breaks into your car and steals your audio system
There are also other options, such as “classic car insurance” and “new car insurance,” but the above are the most important and common potential add-ons.
How To Choose The Best Car Insurance
When it comes to choosing the right car insurance, there are a number of things you should do before you even start looking at providers:
- Check your state’s insurance department’s website and find out what type of insurance the law requires in your state. You can find links to state insurance companies here.
- Consider your needs. While everyone will need liability insurance and medical payment coverage is highly recommended, consider whether you need more comprehensive coverage. Will you be unable to work if your car is written off? Do you have alternative transport, or will you need a rental car while your car is being repaired? While these additions will make your premium payments more expensive, they can save your income in the event of a serious accident.
- Decide who needs to be included on the policy. Do you need the coverage to follow the car or the driver? Do you need coverage for you to drive multiple cars, or do you need to cover multiple drivers for a single car?
When you have the answers to these questions, you can start looking at insurance companies and the policies they offer that suit your needs.
- Make a shortlist of car insurance providers that are active in your area based on their financial ratings and overall good customer reviews.
- Request quotes from these companies so you can compare the costs and policies.
- Look at the financial basics such as the cost of premiums, level of deductibles, and maximum payouts.
- Also look at the fine print to see what is included and excluded and for other red flags. For example, some insurance companies will give short windows of time, sometimes as little as 24 hours, for advising them of an accident for which you want to make a claim.
It is then just a matter of choosing the policy that best matches your budget and your requirements.
How Are Car Insurance Premiums Calculated?
It is well known that car insurance premiums are not the same for everyone, and that a woman who has been driving a car for 30 years will pay lower premiums for the same car than a 20-year-old man who has only had his license for two years.
A number of factors are used to calculate car insurance premiums. These can be broken into three categories: demographic factors, driving experience, and car-related factors.
Among the most important demographic factors are:
- Gender and Age – This is based on statistics around accidents. For example, young men are considered more likely to have accidents than older women, while older men are thought to have fewer accidents than older women.
- Where you live – Most accidents happen close to home, so rates can rise if you live in a heavily populated area that is a high risk for accidents. Repairing your car also costs more in some areas, which again can affect your premiums.
Insurers may also take into account other factors such as marital status and profession. For example, married men statistically tend to have fewer accidents than unmarried men, which can lower their premiums. Also, professions that require someone to spend a lot of time on the road can raise their premiums.
Insurance companies will pay significant attention to driving history when deciding premium levels. If you have made a lot of claims, been in quite a few accidents, or have received a notable number of tickets, these are all red flags that will increase your premiums. If your record is too bad, some companies may refuse to insure you at all.
Insurers may also ask questions about how often you use your car and where you store it, for example on the street or in a garage, to decide premiums.
The nature of the car you drive is also a significant determining factor.
First and foremost is its safety rating. In theory, the higher the safety rating, the lower the related medical bills are likely to be. Safety ratings are determined by features such as airbags, automatic seatbelts, traction control, and so forth.
The size of the car also makes a difference, with large cars generally considered safer than smaller vehicles. However, more powerful engines are also considered to be more dangerous, so a big v8 engine will push premiums up.
The age of the car can also make a difference. While new cars are more expensive to repair and replace, older cars are more likely to be written off. Certain car brands that are particularly popular among thieves are also a bit more expensive to insure.
Cost Of Car Insurance
While the cost of car insurance varies considerably based on who you are, where you live, what you drive, and the kind of policy you take out, the national average cost for car insurance is $1,427 per year for a good driver of around 40 years of age.
You can see more detailed estimates based on various factors here.
Benefits Of Car Insurance
- It’s the law – all states require a certain level of auto insurance. If you don’t have it, not only will you need to pay for any liability yourself, but if you are caught driving without insurance you will be fined, which is an additional expense.
- Financial security – Accidents are by definition unpredictable, and so are their costs. Insurance premiums and deducatables are predictable, which makes it possible to budget for the unexpected.
- It protects you from lawsuits – If you do cause an accident, and you don’t have the insurance to cover your liability, in most states you can be sued for damages. In this case, the plaintiff may be able to go after your savings, earnings, or even your home. Appropriate levels of insurance protect you against this outcome.
Not only is a certain level of car insurance compulsory to take to the roads, but it can make a huge difference if you are in an accident. It can save you from bankruptcy if you are found liable for an accident, and it can help keep you on the road and working if your car is damaged or stolen.
Choosing the right car insurance is not rocket science—it is a matter of having a clear idea of the kind of coverage you need and what you can afford, and then finding a reliable car insurance company that offers plans that meet your needs and budget.
Hopefully, with our list of the best car insurance companies and our comprehensive guide on choosing the right car insurance, you should be able to find the right policy for you.
What Is A Good Price For Auto Insurance?
While prices vary significantly depending on a variety of factors, and in particular what state you live in, you can expect to pay between $500–$900 for minimum coverage and between $1,500–$2,500 for full comprehensive coverage.
How Can I Make My Car Insurance Cheaper?
There are a number of things you can do to reduce your car insurance premiums. You can agree to higher out-of-pocket deductibles when you make a claim. You can maintain a good credit score. If your premiums are high due to previous accidents and claims, you can participate in programs where your driving is monitored by a dashcam and you are rewarded for good driving.
How Long Am I Considered A New Driver?
You are typically considered a new driver until the age of 25.
What Makes You A High-Risk Driver?
You are usually considered a high-risk driver if you have had more than one auto accident, if you have received multiple speeding tickets or traffic citations, or if you have been convicted of driving under the influence.