How To Choose Car Insurance
Cars are the largest purchases many people make in their lives, so it’s important (and required by law) to protect your vehicle with insurance. Car insurance companies pay for repairs, injuries, and other expenses that arise after an accident or damage, making them one of the most essential parts of any American’s driving life.
Unfortunately, there are so many companies and policy options available that it can be extremely difficult to choose the best and most cost-effective car insurance provider, so let’s take a closer look at how to pick the best company for your needs.
Why Choosing the Right Car Insurance Matters
Most people don’t need their auto insurance company until they really need their car insurance company, making it vital that the agent or representative on the other end of the line is ready and willing to help after an accident.
While pricing is a significant part of the process for many people, service and trust are also important, and can make the difference between a smooth, convenient insurance experience and a painful one.
How to Choose Car Insurance That Best Fits Your Needs
Reviewing car insurance companies isn’t necessarily difficult, but it can be time-consuming. Don’t skip the research stage, and take your time to understand the ins and outs of each company’s offerings.
Be sure to look for policies that align with your needs and budget, and try to avoid buying more coverage than you need when shopping for insurance.
Finally, consider whether you want to deal with an insurance agent or prefer more remote interactions. Many insurance companies also offer other coverage options, including health insurance, pet insurance, renters policies, homeowners coverage, and more, so it’s a good idea to find areas to bundle policies to save money.
1. Cost
The price of an insurance policy is one of the most important metrics for many drivers, but there are so many factors that impact policy pricing that it can be nearly impossible to understand the process.
In general, insurance companies look at several factors when pricing a policy: the driver’s history, the type of car they drive, and where they live. Depending on the state, the company may also run a credit report, and most insurers use the driver’s age and demographic background as factors in pricing. Some offer good student discounts and other programs that lower their average prices as well.
If you’re looking to save money on car insurance, shopping around is one of the best ways to conserve cash. It’s often possible to save a significant amount of money by comparing rates and discount programs, and some smaller local agencies may offer price-matching services that align them more closely with their much larger, national competitors.
Cutting your level of coverage is another way to save money, but it comes with significant risks to your financial situation. Any repair costs or liabilities above and beyond what your policy covers are your responsibility, which for newer, more expensive cars can create a big financial headache.
Related Article: Can You Use a Personal Loan to Buy a Car?
Discounts
Insurance can be expensive, but the good news is that most auto insurers offer extensive discount programs that cover a good number of their customers. Common discounts include multiple policies, good student, good driver, military, and more. While they won’t make an insurance policy free, many people can “stack” the discounts to save even more.
2. Coverage Options and Your Needs
It’s important to align your insurance policy with your needs to avoid paying too much or missing coverage. While the basic concept of insurance is the same between companies, some companies offer unique types of coverage, pricing models, and discounts.
Take the time to investigate each company’s offerings, being sure to look for coverage options that work for your vehicle and needs. You may not need the most intense, comprehensive-coverage insurance for an older vehicle, but some banks and auto loan lenders require that coverage for new auto purchases. In general, liability insurance and collision coverage are decent baseline protections.
Special coverage may be required if you use your vehicle for ridesharing or if you drive a classic car, so factor those needs into your selection process. It’s also important to consider coverage for lost wages, medical bills, uninsured motorist protection, medical payments coverage, and don’t forget bodily injury liability coverage.
3. Reviews
It’s easy to find a near-endless number of angry customers online, so you’ll have to spend some time digging in to determine which are valid complaints and which are driven by a single bad experience.
Take time to review customers’ reports of service issues, payment challenges, and the claims process. Take note of any recurring issues, such as slow or denied claims, which you can discuss with an agent before signing up.
Finally, it’s a good idea to look for reviews from longer-term customers, as they sometimes experience price increases or changes in customer service that newer customers miss.
4. Company Transparency
There’s almost nothing worse than trying to chase down information from an insurance company, so it’s important to look for insurers that inspire your trust. Customer reviews are a good resource to determine a company’s transparency, with the best companies’ customers reporting no surprises in pricing or policy coverage.
Less transparent companies may have many negative customer reviews around their pricing and policies, with customers saying they were charged unexpectedly or were surprised by a denied claim.
5. Claims Process and Service
The speed and smoothness of claims resolution are two of the most important metrics to consider when choosing an insurer. Waiting to be paid after an accident can be excruciating and inconvenient, so it’s important to look for companies that have strong customer reviews for speedy, smooth claim resolutions.
6. Availability in Your Location
Most of the large insurance companies you see on TV operate nationally, with coverage options in all 50 states, but that isn’t always the case. Some insurance companies operate regionally, covering a limited number of states, so you’ll need to shop around to find the companies that service your area.
Don’t be afraid to look at smaller, local companies, as they are often able to offer pricing flexibility and other benefits that their larger counterparts can’t.
It’s also a good idea to look at rates for your area compared with the national averages. Some insurance companies charge more for drivers living in what they consider high-risk areas, so you’ll want to consider all of your options before settling on a provider.
Which is the Best Car Insurance Company for You?
One of the most important things you can do when shopping for car insurance is to take your time. Don’t rush through the research, and make the effort to read customer reviews to understand how others experienced the company.
Stick to your budget, and don’t be wooed by fancy insurance products that you might not need.
Finally, remember that loyalty doesn’t generally pay off in the insurance world, so don’t be afraid to take steps to switch to a different carrier if you believe it could be a better choice for you and your needs.
Top Car Insurance Companies to Consider
If you’re still unsure where to start, here are some of the best cheap car insurance companies we’ve reviewed, each offering a unique blend of pricing, service, and features. Be sure to compare their coverage options, discounts, and availability in your area:
- Geico – Best Overall
Affordable rates, strong customer service, and a wide range of discounts. - State Farm – Best for Bundling
Extensive agent network and excellent multi-policy discount programs. - Auto-Owners Insurance – Best Regional Provider
Exceptional customer service and pricing, but only available in 26 states. - USAA – Best for Military Families
Great service and low rates for eligible current and former military members. - Lemonade – Best Tech Option
Digital-first insurance with usage-based pricing for low-mileage drivers in select states.
