The Best Car Insurance Companies of 2020
The 6 best car insurance companies of 2020
- Amica Mutual – Best overall car insurance
- State Farm – Best for customer support
- Progressive – Best for discounts
- The Hartford – Best policy options
- Geico – Best for tech-savvy consumers
- USAA – Best for members of the military
Compare the top rated car insurance companies of 2020
|SimpleScore||J.D. Power Rating||AM Best Rating||BBB Rating||S&P Rating|
Other car insurance companies to consider
Many of the best car insurance companies operate regionally, meaning they aren’t available in all areas of the country. Here are some of the other best car insurance companies worth checking out
Compare the pros and cons of our top picks
|Amica Mutual||Great rates and discounts||More likely to deny coverage|
|Geico||Affordability and discounts||Customer service is only average|
|Progressive||Wide selection of coverage||Low rated customer service|
|State Farm||Excellent customer service||Little flexibility in coverage|
|The Hartford||Great for AARP members||Rates are above average|
|USAA||Guaranteed renewal||Not available to non-military|
The best auto insurance companies explained
How does car insurance work?
Auto insurance is how you pay for the damages after a car accident — damages to yourself, your car and in some cases, other drivers’ cars.
In the event of a collision or accident, your deductible is the amount you pay before your insurance carrier will step in to cover the rest. The higher the deductible, the more you have to pay before the policy kicks in. For example, if your deductible is $1,000 and you have $1,200 worth of damages to your car after a collision, you will pay $1,000 and insurance will cover the rest.
After a collision, you don’t get money to cover damages automatically. You have to file a claim. Start by contacting your insurance agent, regardless if you were at fault or not. You’ll want to keep any documentation or medical bills and take pictures of the damage of your car. The claims process should be fairly painless, though you should always review to ensure you’re satisfied with your payout.
How to choose the best car insurance company for you
This isn’t Sisterhood of the Traveling Pants — your car insurance premium might not fit your best friend’s needs. Because of that, there isn’t one best car insurance company that is the right fit for every driver. Thankfully you have The Simple Dollar working to help you make frugal and savvy financial decisions that fit everyone. Car insurance is regulated on a state level and coverage costs can vary based on where you live. Meaning your friend or neighbor may pay a different amount based on their location, selected coverage and driving history. If you’re thinking of switching car insurance companies and want to ensure you get the best coverage for your needs, here are the steps you should follow.
1. Check your state-required coverage
In nearly all states, drivers are required by law to carry some form of car insurance or proof of financial responsibility. Every state has requirements for the level of insurance and the minimum amount of coverage each driver must have. For example, Virginia has minimum requirements for insurance, but drivers can bypass paying for an insurance premium by paying the state $500 each year. This fee doesn’t give the driver insurance, but it allows them to drive at their own risk. Use the Insurance Information Institute’s guide to determine the insurance requirements for your state.
After you’ve found what’s the minimum amount of insurance required for your state, you should next determine if you live in a no-fault or fault state. In a no-fault state, your car insurance will pay for your vehicle’s damages and your medical bills after an accident, regardless of who caused the crash. In a fault state, the person who causes the accident is responsible for covering the other driver’s losses.
No-fault states include: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah
[Read: What Does At-Fault Mean?]
2. Know your deductible
Most coverage options will have a deductible –– the amount of money you have to pay out-of-pocket towards a covered loss before your insurance policy will step in. Collision, comprehensive and uninsured/underinsured motorist coverage will all have a deductible.
While you shouldn’t opt out of coverage options just to save money, there are times it just doesn’t make sense to have the extra coverage. A classic example is collision coverage. If your car’s value is too close to the deductible, you probably won’t get reimbursed from your insurance company after a loss.
Let’s say your car is worth $1,000 and your deductible is $1,000. If you get into an accident and your car sustains $800 worth of damage, you wouldn’t get an insurance payout because your deductible would cover the entire cost. It’s always important to determine which types of coverage make sense for you, but especially if you have an older car that’s low in value.
3. Shop around
Risk isn’t the only factor that car insurance companies use to calculate your rate. Many insurers also use “price optimization,” meaning they set rates based on how much customers are willing to pay.
Large insurance companies analyze an enormous amount of customers’ personal data, such as social media posts, credit scores and even your online shopping habits. Then, they run the data through a proprietary algorithm that estimates how likely you are to shop around or just renew your existing policy each year. By doing so, they can increase your premium just enough to raise their profit margins without attracting your attention and prompting you to shop for a new policy.
Shopping around every year or two is the best way to avoid this practice and it will help you find the cheapest car insurance options. For most car insurance companies, getting a quote is an easy, online process that you can do in minutes. You’ll just need to provide information like your address, vehicle information and driving history.
Taking an hour or so out of a slow weekend can save you hundreds of dollars. Getting an online quote from various auto insurers is quick, easy and free. What could be better than a free activity that saves you a considerable amount of money?
Alternatively you might want to contact an independent insurance agent, who can shop among several companies for your best deal. Even if you like your current car insurance company, they’re likely aware of your online activity, so the more quotes you get, the less likely you are to be tagged as someone who won’t jump ship for a better deal.
4. Consider discounts
If you want a policy with a lot of additional coverage, the end price can feel a little overwhelming. Especially when you consider car insurance isn’t something you’re actively using every day. Capitalizing on the discounts providers offer is one way to ease that financial burden. When you’re shopping around, look for discounts that tailor to your needs. Here are some of the common discounts offered by most providers:
- Defensive driving discount
- Good driver discount
- Low mileage discount
- Safe driver discount
- Multi-driver or multi-policy discount
- Student discount
How to choose the right amount of auto insurance coverage
The state you live in will have minimum auto insurance thresholds. You have to meet them to legally drive. This minimum is set to create a baseline of insurance to cover all drivers on the road, so it may not be the ideal amount of coverage specifically for your situation. In some cases, the minimum coverage won’t be enough to keep you from financial ruin if you cause a car crash or fender bender. It’s important to understand how much coverage you need before you start shopping for a policy.
The amount of coverage you choose will have a direct impact on how much you pay for your auto insurance, but that doesn’t necessarily mean you should go with the state imposed minimum coverage limits. For example, in a major accident it is quite possible an individual’s medical expenses could exceed $15,000, yet that’s the minimum liability limit in some states. Choose a coverage that you think will exceed what you might need when it comes to liability.
The mandatory coverage you must have is: bodily injury and property damage liability. Though there are additional coverage options that can be a good fit and potentially prevent you from paying thousands of dollars out-of-pocket in the event that you’re involved in or cause an automobile collision.
- Bodily injury liability
- Rental car coverage
- Uninsured/underinsured motorist coverage
- Collision insurance
- Comprehensive insurance
- Personal injury protection
- Property damage liability
- Gap insurance
- New car replacement
Below is a comparison of the coverages offered by our top car insurance companies, and a breakdown of each type of coverage. Note that not every type of coverage is available in all states.
|Vehicle and policy coverages||Amica||State Farm||The Hartford||Geico||USAA||Progressive|
|Bodily injury liability||✓||✓||✓||✓||✓||✓|
|Personal injury protection||✓||✓||✓||✓||✓||✓|
|Property damage liability||✓||✓||✓||✓||✓||✓|
|Rental car coverage||✓||✓||✓||✓||✓||✓|
|Uninsured/underinsured motorist coverage||✓||✓||✓||✓||✓||✓|
|Pet injury coverage||X||X||X||X||X||✓|
|New car replacement||X||X||✓||X||X||X|
Full coverage vs. state minimum required coverage
You should compare rates that include more than your state’s minimum required coverages to get the best idea of how much car insurance costs. Below are the top 10 most populated states and the difference in an average annual premium between a full coverage policy and the state minimum requirement. You’ll notice that the full coverage annual rate is significantly higher in each state. But an inclusive car insurance policy isn’t something you should opt out of just to save money. You don’t want to find yourself underinsured after a collision.
|State||Full coverage annual rate||State minimum annual rate|
Car insurance rate data: Both full coverage and state minimum liability premiums are assuming a 30-year-old with good credit who drives a 2017 Honda Civic.
Best car insurance companies for customer satisfaction across the U.S.
|Region||Best car insurance companies|
Auto Club of Southern California Insurance Group
|New England||Amica Mutual|
|New York||New York Central Mutual|
IN Farm Bureau
|Southeast||Farm Bureau Insurance – Tennessee|
|Texas||TX Farm Bureau|
National car insurance ratings and industry statistics
Some of these insurance companies only serve regional areas, like New York Central Mutual and Texas Farm Bureau. Others, like Allstate and State Farm, sell car insurance to customers in all fifty states.
When choosing an insurance company, consider the pros and cons of regional and national providers. Regional providers often outshine nationwide options because they have fewer customers, allowing them to dedicate more time to each policyholder. So if customer service and the availability of representatives is important to you, a regional option may be best for you.
However, because regional insurance providers have fewer customers, they also tend to have more expensive premiums and fewer discounts. National providers win when it comes to price, through cheaper premiums and discounts that help save you money. Most nationwide providers do typically have an online experience, which can be a problem for some policyholders.
The 10 largest car insurance companies by market share
Here are the Insurance Information Institute’s top 10 private passenger car insurance carriers and their market share, based on 2019 statistics. State Farm holds the majority of market share in direct premiums written in 2019 with 16.1%, which is likely due to its high customer satisfaction and top-notch claims handling.
|1||State Farm Mutual||16.1%|
|2||Berkshire Hathaway, Inc.||13.8%|
|5||USAA Insurance Group||6.0%|
|8||Nationwide Mutual Group||2.5%|
|10||Travelers Companies Inc.||1.9%|
Market share data is from the Insurance Information Institute. Annual premiums are based on an average of full coverage policies across all 50 states for a 30-year-old with good credit driving a 2017 Honda Civic.
What is a car insurance policy?
Car insurance keeps you financially safe when the time comes to file a claim. Covering you and any family members on your policy, your insurance covers you whether you’re driving your car or someone else’s.
When you purchase a car insurance policy, you have the option to pay your premium monthly, bi-annually or annually. Undeniably, paying your premium annually requires a lot of money up front. So if you’re on a tight budget, it makes sense to pay monthly and avoid a large one-time fee. But if you can afford it, you can pay your annual premium in full to snag discounts and take a monthly bill off your plate.
Most car insurance companies will offer a discount for customers who can pay their premium in full. Depending on the price of your premium, the savings could be significant. If you choose to pay monthly that doesn’t mean you’ll miss out on savings, some insurance companies will offer a discount if you sign up for autopay.
How much will car insurance cost?
How much your premium will be will vary for each person, though the U.S. average cost of car insurance is $1,758 per year. Companies assess a number of factors to calculate your risk of filing a claim. The higher the risk, the more expensive the premium. Though each company weighs these factors differently, some of the most common are:
- Your driving history
- Basic demographics (age, gender and where you live)
- The car you drive
- Your credit score
- The amount of coverage you choose
- The type of coverage you choose
The list above isn’t exhaustive, but it shows you how insurance companies take a wide variety of factors into consideration when setting auto insurance premiums. Higher deductibles can give you lower monthly premiums. Basic demographics can have a positive or negative impact. For example, older people will typically get a lower premium than teens and those in their 20s. Also, different insurance companies will weigh these factors differently, which increases the importance of comparing rates from several companies. Chances are if you don’t get multiple quotes to compare rates you’re going to end up paying too much. Consider some of the following ways to lower your auto insurance premiums: choose a higher deductible, get a discount for bundling with other policies or simply be a safe driver to lower your premiums over time.
We welcome your feedback on this article and would love to hear about your experience with the car insurance companies we recommend. Contact us at firstname.lastname@example.org with comments or questions.