Who Has the Cheapest Car Insurance?

Generally, drivers are required by law to purchase auto insurance, although the rules about which types of coverage you need to buy and the amount of coverage you must have varies widely by state. No matter where you live, purchasing insurance can cost hundreds or even thousands of dollars annually.

While you need insurance coverage to comply with the law and to protect yourself in case of an accident, you don’t want to pay more than necessary for your coverage. Fortunately, you can choose from among many different auto insurance companies. Prices can vary dramatically from one insurer to the next, so shopping around among different insurers can be the best way to keep your auto insurance policy costs down.

This guide to the cheapest car insurance companies can help you to get started in looking for insurance coverage in your price range.

In this guide:

• Cheapest Car Insurance Companies
• Minimizing the Cost of a Car Insurance Policy
• Factors that Affect the Cost of Car Insurance

Cheapest Car Insurance Companies

The costs of auto insurance can vary by thousands of dollars from one insurer to another. Car insurance rates vary, but of the largest insurance companies, GEICO is one company with policy premiums below most of its competitors.

USAA is also noted for its affordability, but only members of the military, veterans, and their families are eligible to become USAA members and obtain a USAA car insurance policy. But, while these large insurance companies may provide cost-effective coverage, you can also find policies from smaller local insurers at cheap prices as well.

Here are five great options for affordable car insurance coverage. The premiums listed below are nationwide averages of coverage for drivers of all ages, so keep in mind that more experienced and reliable drivers may pay lower premiums than the national average, and people with a rocky driving record may pay more.

USAA

The national average USAA auto insurance premium is $2,537.30, according to U.S. News and World Report. USAA gets top marks for customer service, in addition to being the least expensive option. More than 76 percent of USAA customers who had to file claims were satisfied with how easy the process was, and around 75 percent of USAA customers said they’d both renew their USAA coverage and recommend it to others.

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GEICO

GEICO’s national average auto insurance premium is $3,215.01. This makes GEICO the cheapest option for those who cannot qualify for USAA coverage. GEICO also ranks fourth on U.S. News & World Report’s list of the best car insurance companies in the country. While 80 percent of customers who made claims with GEICO said they were satisfied with the process, just 44 percent indicated they were satisfied with the communication as they made their claim. Still, about 66 percent of GEICO customers indicated they’d recommend GEICO to others.

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State Farm

State Farm has a national average auto insurance premium of $3,260.00. This is just a bit above GEICO’s average premium price. But, State Farm ranks third on U.S. News & World Report’s rankings of insurance companies, just above GEICO. A full 81 percent of State Farm customers who made claims said they were satisfied with the process, and 62 percent of all customers said they’d recommend State Farm to others looking for car insurance.

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American Family

The national average premium charged by American Family is $3,443.09 per year. American Family ranks tenth on U.S. News & World Report’s list of insurers, with just 57 percent of customers indicating they were satisfied with the customer service American Family provides. A full 67 percent of customers were either unsatisfied or very unsatisfied with the claims handling process, and just one-third of survey respondents said they’d recommend American Family to someone looking for auto insurance coverage.

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Nationwide

Nationwide’s national average auto insurance premium is $3,450.00. Nationwide is the last company on U.S. News & World Report’s list that had national average premiums of under $4,000, and it’s sixth on the list of the best car insurers in the country, with 66 percent of customers saying they’d recommend Nationwide to others.

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Smaller Insurers to Consider

While the best auto insurance companies often provide affordable premiums, you should also consider smaller insurers such as Grange, Erie, and County Financial. Each of these insurers offers average premiums that are competitive with or below the premiums offered by larger insurers within their states.

Minimizing the Cost of a Car Insurance Policy

It’s important to do everything you can to keep your car insurance costs as cheap as possible. Some of the ways to do that include:

• Buying only the minimum coverage: More insurance coverage costs more, so buying the minimum required for your state will keep premium costs down. For example, some states only require you to purchase property damage liability and bodily injury liability insurance, while others require you to purchase personal injury protection and uninsured motorist coverage as well. You can also choose higher or lower coverage amounts under each type of coverage you include in your policy. Unfortunately, opting for the minimum required coverage will significantly increase your risks. You could end up being sued if you cause more damage than your policy will cover, and you could end up paying thousands of dollars out-of-pocket if you get into an accident and don’t have collision coverage and comprehensive coverage for your own car.
• Bundling your policies: A better way to keep costs down is to bundle your policies. This means buying your auto insurance and your home insurance from the same insurance provider, along with any other policies you need. The more policies you buy from a single provider, the more discounts you may be eligible to earn on premiums.
• Keeping your deductible high: If you have a high deductible, you pay more out of pocket when you need to make a claim. But your monthly premiums will be lower, and if you don’t end up filing a claim that year, you’ll come out ahead. Just make sure your deductible isn’t more than you can afford.

Remember, the purpose of insurance is to allocate costs and risks over time. Paying more for coverage up front means you have a reduced risk of incurring big costs later. 

Factors that Affect the Cost of Car Insurance

Many different factors can affect the cost of car insurance. For example, insurers consider:

• Your driving record: If you have a history of moving violations, DUIs, or car accidents, you’re seen as riskier and your insurance rates will be higher. Also, if you’ve only just started driving and have little driving history to show, your insurer will assume you pose more risk. However, if you’ve been with the same auto insurance company for a number of years and you’ve filed no more than one claim, you may qualify for a good driver or accident forgiveness discount.
• The people you add to your policy: If you plan to add family members to your policy, they might drive your policy premiums up, based on their own driving history. The biggest culprits here are teenage drivers, who receive far higher rates than average adults.
• The vehicle you own: If you own an expensive sports car, your vehicle will cost more to replace or repair after an accident. Therefore, you will need higher auto insurance coverage limits, and your policy premiums be higher.
• Your credit score: Your credit score matters because it’s an indicator of whether you’ll pay on time and of how responsible you are. If you have a poor credit score, your auto insurance premiums will be higher.

If you want to get the best rates, you should try to bundle your insurance policies, think carefully about who you add to your policy, and think about driving a less expensive vehicle with good safety features, such as airbags and anti-theft technology.

Bottom Line: Do Your Research Before Buying Car Insurance

Car insurance is expensive, but by researching the different types of policies and comparing car insurance quotes from several different insurers, you can make sure you get the most affordable policy possible.