Best Cheap Insurances of 2020
Finding the best cheap insurance rates for your home, automobile, and life is difficult. Not only do you need to decide what type of coverage you want, and how much, but you need to dig around until you find the best deals.
Unfortunately, insurance prices are based on highly personal factors such as age, sex, health, or credit history. Because of the many personal factors that affect your premium, the cheapest insurance company for your friend or neighbor could be the most expensive for you. Start your search today by typing your zip code into the comparison tool below and see who gives you the cheapest quote based on your unique circumstances.
The best cheap insurance companies
- Best Cheap Insurance for Policy Options: MetLife and State Farm
- Best Cheap Insurance for Military Members and Their Families: USAA
- Best Cheap Insurance for Bundling: Nationwide
- Best Cheap Insurance for Homeowners Discounts: Allstate
- Best Cheap Insurance for Auto Discounts: Farmers
We dug in and did some comprehensive research to find the cheapest insurance companies across the board, and below we detail why they are among the cheapest companies. We also uncover the main factors that impact insurance policy rates, so you can be armed with the best information on how to minimize your insurance bill. Since there are so many individual factors, the best starting point for insurance is to shop around with an online quote tool.
Best Cheap Insurance for Policy Options: State Farm and MetLife
Both State Farm and MetLife offer all major policy types — home, auto, and life — with an impressive range of customization. They also earn good marks for value.
State Farm is also among the highest-ranked companies for claims and service, and you have the option of doing business with more than 18,000 agents or buying direct online.
If you do work with an agent, be aware that State Farm agents only sell State Farm insurance products. That’s fine if you’re sure you want a policy with State Farm, but they won’t help you shop around. The company also offers few breaks on home insurance.
Customers should note that the company offers few discounts compared to its competitors, however. It also falls behind the pack with weaker educational articles and tools that help prospective customers make wiser policy choices.
The company offers all major insurance types (auto, home, and life) and a range of other policies, too, including business and travel coverage. Customers also benefit from a clear, well-organized website and smooth online quote tools, including for life insurance — a rarity.
USAA doesn’t have local agents, though this may not be a con if you don’t want or need to do business in person. The company’s biggest downside is its limited availability: You or a close family member must be affiliated with the armed forces to get coverage from USAA.
Nationwide particularly shines with its flexible multi-policy discounts. Many companies restrict you to bundling two policies for a discount, but Nationwide allows you to combine auto, home, and life for up to a 25% discount. It also offers up to a 20% discount for auto and home bundles as well as to customers who insure two or more cars.
The company also offers price breaks for other policy combos that might include motorcycle insurance, boat insurance, or several other kinds of specialty insurance.
Allstate has an average number of auto insurance discounts, but it makes up for it by offering almost every kind of homeowners insurance discount there is, including breaks for smoke-free homes, claims-free customers, and early sign-ups. Customers also give Allstate solid or good marks for value overall, making the company one to investigate for budget-savvy shoppers.
Farmers offers 17 of the most common car-insurance discounts, besting nine of its largest competitors. They include a fairly rare discount for “green” vehicles such as hybrids. The company also offers a robust number of breaks on homeowners insurance, too, including discounts for protective measures such as roofing upgrades as well as for newly built and renovated homes.
Selecting Your Coverage: What You Should Know
Whether you’re in search of cheap insurance rates for your home, auto, or life, it’s important to understand the factors that influence pricing, as well as pitfalls to watch out for. Here are details about each type of coverage you should know inside and out:
When shopping for cheap auto insurance rates, you’ll encounter a wide range of factors that affect pricing and the type of coverage you can buy. This can be both a good thing and a bad thing for the consumer. While having the ability to patch together a unique policy that meets your individual needs is usually seen as a good thing, the multiple layers of detail to consider can be absolutely overwhelming and confusing for the consumer.
Before we go any further, let’s look at some of the factors that will drive up – or decrease – your auto insurance rates:
- Type of coverage: You can buy several different types of coverage as part of your auto policy, including full or “comprehensive” coverage, liability coverage, and collision coverage. Since each type offers a different tier of coverage, pricing for different policies tends to vary drastically.
- Your policy limits: While individual states choose minimum coverage standards for their residents, many shoppers prefer to buy more coverage for greater protection. As a general rule, the more coverage you buy, the more expensive your policy becomes.
- Where you live: Auto insurance rates can vary drastically based on geographical factors, including not just the state but even the neighborhood you live in.
- The age and condition of your vehicle: Newer vehicles usually cost more to insure, while older and less expensive vehicles may be insured at a discount.
- Your credit score: Many insurance companies consider your personal credit score when determining your auto insurance rates. The better your credit score, the better chance you have at the most affordable rates.
- Your driving history: If you’ve had several accidents or tickets in the last few years, your auto insurance rates will likely be higher to reflect the increased risk.
- Your deductible: A policy with a high deductible — the amount you have to pay out of pocket before insurance kicks in — will generally cost less than a policy with a low deductible.
Details to Consider as You Shop Around
- Consider bundling your policies. Some insurance providers will offer a large discount if you buy more than one policy, or “bundle” your policies together. When shopping for cheap auto insurance rates, make sure to check pricing on other types of insurance you may need to buy, such as homeowners or renter’s insurance.
- Don’t let low prices tempt you into buying less coverage than you need. While buying minimum coverage on your automobile will definitely save you money in the short term, getting into an accident with insufficient coverage could potentially ruin your finances.
- Don’t buy too much coverage, either. While you don’t want to buy less coverage than you need, it’s also possible to buy more coverage than what is reasonable for your situation. Most of the time, there is a “sweet spot” to be found – one where you’re paying the best price possible for the exact amount of coverage your situation requires.
- If your situation changes, you can always switch plans again in the future. If bad credit or a poor driving history are driving your rates up at the moment, you may be in a better position to get cheaper rates if you wait it out. Consider taking steps to improve your credit and be especially careful to obey traffic signals and follow all the rules of the road when you’re driving. Over time, the negative factors influencing your rates should fade away.
Home insurance is a lot like auto insurance in that several key factors affect pricing. Most of the time, finding the best home insurance rates is a matter of shopping around among several companies until you find the best quote for the exact level of coverage you hope to attain.
Here are some of the main factors that will impact the price of your homeowner’s insurance policy:
- Your home’s age and type of construction: Older homes tend to have more problems with their major components, and may be built with materials that are especially expensive to repair or replace. The increased costs associated with older homes will most likely be reflected in your home insurance rates.
- Your credit score: Many insurance companies look at your credit score when determining your rates. If your score is lagging, you may need to pay more for coverage.
- Your claims history: If you’ve made several claims on previous homeowner’s insurance policies, you may pay higher rates down the line.
- Risk factors: Risk factors that can drive up the cost of your policy can include aggressive pets, a swimming pool, a large trampoline in the back yard, and anything else that your insurance company deems risky.
- The location of your home: Where you live will most certainly affect your home insurance rates, and that’s especially true if you live in an area prone to natural disasters such as wildfires, hurricanes, or earthquakes.
- Your deductible: As with auto insurance, if you choose a policy with a high deductible, you will generally pay lower premiums. Likewise, a policy with a low deductible will almost always cost more.
- The level of coverage you buy: Buying additional coverage on your home will almost always add to the total cost of your policy.
Details to Consider as You Shop Around
- Consider bundling your policies. Many insurance companies offer discounts if you sign up for multiple policies with them, or “bundle” your policies. When shopping for insurance for your home, make sure to check prices on auto and life as well. You may be able to secure cheaper rates if you switch more than one policy to your new company.
- Make sure to choose a deductible you can live with. While policies with a high deductible are definitely more affordable, you want to make sure you choose a deductible you can actually afford to pay if you needed to make a claim.
- Control your risk factors. While you can’t control the location of your home, you can limit some of your risk factors like getting an aggressive dog or having an on-site pool without a fence.
- Ask for discounts. Some home insurance companies will offer discounts if you prepay your premium for the year, sign up for multiple policies, agree to receive your statements electronically, or have never filed a claim. Make sure to ask about any discounts that might be available for your policy before signing up.
Shopping around for life insurance can be downright stressful. Not only can the type of insurance you buy affect your rate, but there are plenty of other factors that will influence the cost of your policy over the years.
Here are the main factors that will dictate how much your life insurance premiums will cost on a monthly or annual basis:
- The type of coverage you buy: While you can buy several different types of life insurance coverage, most policies either fall under the umbrella of term coverage or whole life. Term policies only provide coverage for a specified length of time, which is why they are generally more affordable. Whole life policies, on the other hand, offer lifetime coverage but tend to cost more.
- How much coverage you buy: The price of your life insurance policy can climb considerably based on the amount of coverage you buy.
- Your age and health: Your age and overall health will play a huge role in the price you’ll pay for life insurance coverage. Health conditions such as obesity, heart disease, or diabetes will drive up the cost of your coverage considerably.
- Lifestyle factors: If you smoke or participate in risky activities or sports on a regular basis, you will likely pay a premium for your life insurance coverage.
- Your family history: A family history of early death or chronic illness will drive up the cost of your premiums.
- Your location: Where you live plays a role in the cost of your life insurance premiums, although your geographic location is often out of your control.
Details to Consider as You Shop Around
- Consider bundling. If you bundle your life insurance policy with other insurance policies you must purchase, you could earn a multiple policy discount.
- Work on your health. While some health conditions are out of your control, you may be able to secure cheaper rates if you’re able to lose weight, lower your blood pressure, or get chronic health conditions under control.
- Drop bad habits. Bad habits such as smoking will drive up the cost of your policy while offering no additional coverage in return. The best thing you can do for yourself is quit smoking and adopt a healthier way of living.
- Consider a term policy to save money. Although term life insurance only offers coverage for a set length of time – usually 10-30 years — it is usually much more affordable. If you’re shopping on a budget, consider a term life insurance policy that will provide adequate coverage for your family members if you should pass away unexpectedly during your working years.
Five Tips for Getting Cheap Insurance Quotes
No matter what company you choose, you won’t get the cheapest insurance without knowing what you can do to get and keep a low rate. Some strategies are specific to the type of insurance you need, so if you’re exclusively looking for the best car insurance companies, the best homeowners insurance, or the best life insurance companies, be sure to check out our other articles on how to save. But other savings tips are universal:
1. Shop Around
Consider this the golden rule of finding cheap insurance quotes: It always pays to shop around.
Regardless of what type of insurance you need, never assume a certain provider will be the cheapest insurance company because that was the case for your family or friends. So many factors affect your rate that you’ll never know which company will come out on top until you compare apples to apples.
Instead of wasting time and energy making endless phone calls or filling out the same information on dozens of websites, save time by using an online quote tool like those at the beginning of this article. Online quote tools help you get a quick snapshot of potential rates from several insurance companies at once.
If you want to talk to an agent, consider going to an independent agent who works with multiple insurance companies. They can help you look at a wider range of options than captive agents who are exclusive to one company.
2. Lower Your Risk
If every person who bought an insurance policy actually used it, insurance companies would go out of business fast. So it follows that insurers want customers who pose the least risk of actually making a claim. The less risky you are, the better your rate will be.
In case of auto insurance, eschew powerful, sporty luxury cars in favor of family-friendly sedans, minivans, and SUVs. Drivers of the latter vehicles file a lot fewer claims. Insurers hope the same will be true of you, so you get a better quote.
You can also hedge your risk by driving safer and driving less. Fewer black marks on your driving record and fewer miles on your car can mean more dollars in your pocket.
To stand out as a low-risk customer for home insurance, insurers prefer a new, well-maintained home. You may save big on insurance by purchasing new construction or renovating your older home. Companies also want to see safety features such as smoke alarms, deadbolts, security systems, and even sprinkler systems.
If you’re in an area prone to natural disasters, features such as stronger roofs and windows can help you save (of course, insurers really prefer if you don’t live in these areas, period). Finally, your insurer would love it if you’d forgo potential liability nightmares such as aggressive dogs, swimming pools, and trampolines.
You’ll appear less risky to a life insurance company if you’re in good health. Though you can’t control family history of certain health conditions, you can keep your weight under control and refrain from smoking. You also become a riskier customer every day that you wait to buy a life insurance policy, so act now. The younger you are, the lower the rate you can snag.
3. Don’t Overinsure
Buying too much insurance is one of the easiest ways to overpay without even realizing it. If you’re savvy about how much insurance you really need, you’ll be well on your way to finding the cheapest insurance.
There are three major types of car insurance: liability, collision, and comprehensive. You’re only required to buy liability insurance, which covers the other driver’s personal injury and property damage in a crash where you’re at fault. Collision coverage covers you and your own car; comprehensive coverage takes care of non-crash-related calamities like theft and storm damage.
The latter two types of coverage are very pricey, and they may not be necessary on a car that you drive sparingly or can replace inexpensively in the case of a bad crash. (However, if you lease or took out a loan to pay for your car, you’ll probably be required to keep these coverages.)
For home insurance, be sure that you don’t include the cost of the land your home sits on when you’re calculating the amount of insurance you need. You need to insure only for what it would cost to rebuild (not re-buy) your home.
And while some insurance agents will simply give you a ballpark estimate of how much you’ll need to cover your possessions, consider conducting a thorough home inventory to keep from overinsuring your belongings.
Your life insurance agent would love you to buy an expensive whole life or universal life policy. These policies stay in effect your entire life, with the added benefit of acting as savings vehicles that build cash value. Sounds great, but these benefits make whole and universal life insurance very expensive (mostly because your insurer knows there is a 100% chance it will be on the hook for a death benefit when you pass away).
Except in rare circumstances, it makes more sense for most people to buy term life insurance, which stays in effect only for a predetermined amount of time. Term is far cheaper than other types of life insurance, and there’s a lot less fine print.
4. Keep Your Credit Pristine
For the most part, your credit score won’t affect your life insurance rates except for the hardest-to-get policies. But it’s another story entirely for car and home insurance. It may seem unfair, but the vast majority of car and home insurance companies look at your credit score to help determine your rate.
If you have good credit, your insurer assumes you’re less likely to file a claim and gives you a lower rate. If you have poor credit, you’ll pay more — sometimes much more — because statistics show you’re more likely to file a claim.
Unfortunately, building good credit can be a time-consuming process, and it won’t be something you can do at the last minute before you buy insurance. However, given the range of financial dealings your credit can impact, it’s worth it for the long haul.
5. Think Discounts
The most common kind of insurance discount is the one you’ll get for bundling your policies. It’s worth checking to see whether you’ll get a discount for getting your home, auto, and life insurance through the same company. Be sure to compare whether you’ll actually be paying less overall with the same company than you would with policies elsewhere, though.
If you’re shopping for car insurance, your discount options can be numerous: You can get a break for getting good grades as a student, taking defensive driving courses, going several years without a ticket, and installing a car alarm, among other possibilities.
Homeowners insurers typically offer fewer discounts, but you might save with certain home-safety features or for buying a policy well ahead of when you need it.
Price breaks on life insurance will be few and far between, but be sure to check whether membership in any professional or alumni groups can nab you a better rate. Paying in full or automating payments may also save you money on all insurance types.
The bottom line? Ask companies for a full list of discounts while you’re shopping since they may not publicize all of them.
How I Chose the Best Cheap Insurance Companies
As I mentioned above, there is no single cheapest insurance company for everyone. What you’ll pay varies dramatically based on demographics, your lifestyle, and even your credit score. That’s why it’s especially important to comparison shop for insurance.
That said, customers are more satisfied with the price they’ve paid with some companies versus others. At the very least, that can give you a starting point for your search. I looked at the following sources to determine who made the cut:
- Consumer Reports: The magazine surveyed readers on their satisfaction with auto insurers and home insurers in 2017. Respondents in the auto insurance survey were asked to rate insurers on factors including price satisfaction; respondents in the home insurance survey ranked their satisfaction with factors including premium paid.
- J.D. Power and Associates: The company’s 2017 household insurance studies are based on customers’ experiences with home, life, and auto insurance companies in several categories including satisfaction with price paid for the level of coverage received.
- Insure.com: The website’s 2017 rankings of the best home, life, and auto insurance companies asks customers about their satisfaction with value for price paid, among other questions.
- Companies’ websites: I checked each insurer’s website to see which discounts they advertise for each type of insurance. I also referenced Bankrate’s list of auto insurance discounts.
To fill out the “pros” and “cons” list for each company, I referenced my previous Simple Dollar research on the best insurers that considered factors including reputation for service, claims, geographic and agent availability, ease of getting a quote, and financial stability. However, I did not let these “extras” affect the initial value-based rankings.
Starting Your Search for Cheap Insurance Quotes
If you’re in the market for a certain type of insurance, remember to take a look at our previous roundups of the Best Car Insurance Companies, the Best Home Insurance, and the Best Life Insurance Companies.
Whatever your needs, be sure to start your search by comparison shopping — there’s no guarantee that the companies I profiled above will be cheapest for your unique circumstances. Our online quote tools can give you a quick snapshot from several companies in your area.