Auto insurance offers financial protection in the case of an accident or theft to your vehicle. Consumers make premium payments to a car insurance provider. In exchange for your premium payments, the insurer will cover losses up to a certain amount as outlined in your policy. Covered expenses typically include medical bills, vehicle repair and damage to property.
The majority of U.S. states mandate that all car owners have basic auto insurance. Though laws vary, nearly every state requires car owners to carry bodily injury liability and property damage liability insurance. In addition, many states require drivers to carry personal injury protection and uninsured motorist coverage.
In the case of an accident or theft, you file a claim with the insurance company for compensation and representation.
Top auto insurance carriers
Here are some of the top car insurance companies:
State Farm
State Farm is the largest insurer of vehicles in the U.S. As of 2017, it held more than 18 percent of the auto insurance market with $41.8 billion in premiums, according to the Insurance Information Institute.
It offers collision, comprehensive, liability, uninsured and underinsured motorist and medical payments coverage. The company also provides optional car rental and travel expense coverage, as well as emergency road service and rideshare driver coverage.
It gets an “A-” rating from the Better Business Bureau. And it receives three out of five Circle Ratings from J.D. Power.
State Farm offers the ability to file a claim online at any time and manage your claim 24/7.
Geico
Geico, or the Government Employees Insurance Company, insures more than 27 million vehicles, and is the second-largest U.S. auto insurer.
Berkshire Hathaway-owned Geico offers coverages including bodily injury liability, property damage liability, medical payments coverage, personal injury protection, uninsured and underinsured motorist coverage, collision and comprehensive coverage. It also offers emergency road service, rental reimbursement and mechanical breakdown insurance.
The company has a B+ rating from the Better Business Bureau. It received three out of five Circle Ratings in the latest auto insurance customer satisfaction survey from J.D. Power.
Geico provides 24-hour service, seven days a week year-round to its customers.
Progressive
Progressive is one of the leaders in providing commercial auto insurance. It’s the third-largest auto insurer in the nation. In 2018, it made up 11 percent of the auto insurance market with $27.1 billion direct premiums written. You may be familiar with the company from its host of comical commercial campaigns.
It offers bodily injury and property damage liability insurance, comprehensive and collision coverage, uninsured and underinsured motorist and medical payments insurance. And it will also pay for a rental car while your car is being repaired resulting from a claim.
Progressive receives an “A-” from the Better Business Bureau. J.D. Power gave it three out of five Circle Ratings in the latest auto insurance customer satisfaction survey.
The company provides allows payments and access to policies online and the ability to report or track a claim 24/7.
Allstate
Allstate was the fourth-largest among car insurance companies by direct premiums written in 2018, making up more than 9 percent of the car insurance market. The insurance company offers all auto coverages, including collision, comprehensive, liability, medical payments, uninsured and underinsured, personal injury protection and property protection. It also offers rental car reimbursement, sound system insurance, roadside coverage and a personal umbrella policy.
The Better Business Bureau gives Allstate an “A+” rating. The latest auto insurance customer satisfaction survey from J.D. Power gave it three Circle Ratings out of five.
Allstate offers savings for safe driving with its Drivewise program. You can get up to 3 percent discount off your auto policy for signing up and 15 percent cash back after 50 safe trips. Customer support at the company is available 24/7.
Liberty Mutual
Liberty Mutual is one of the largest corporations in the U.S. based on revenue. And with $11.8 billion of direct premiums written in 2018, it held 5 percent of the auto insurance market. The insurance giant offers bodily injury liability, property damage and medical payments coverage as standard. Add-on protection and coverage includes rental car coverage, towing and labor and accident forgiveness.
It earns an “A-” rating from the Better Business Bureau and receives three out of five Circle Ratings in the latest auto insurance customer satisfaction survey from J.D. Power.
This auto insurer provides an online purchase discount. And with its RightTrack program, which rewards drivers for having a good driving record, you could save up to 30 percent on your insurance. Customer support is available 24/7.
What goes into insurance rates
There’s a long list of options and coverages for purchasing car insurance today, but auto insurance rates vary by insurer and a number of factors. Your age, credit score, location, driving record and vehicle type all influence over the rate you receive.
The average annual cost for auto insurance is $935.80, according to a 2018 report from the National Association of Insurance Commissioners, or NAIC.
Before you decide on an auto insurer, compare car insurance quotes for coverage by provider in your state. Comparison shopping could save you hundreds of dollars or more per year.
Learn more: Auto insurance quotes: How they are determined and what to look for
How to cut auto insurance costs
Comparison shopping for your area of the nation is crucial for finding cheap insurance. Prices vary by insurer. Some companies offer much more affordable options than their competitors.
There are some actions you can take, outside of comparison shopping, to slash your insurance costs. One way you can save is by understanding how much coverage you really need and purchasing accordingly. It also pays to look for discounts from auto insurers for things like maintaining a good driving record, taking a defensive driving course or putting a limited number of miles on your car annually.
Requesting higher deductibles can also lower your insurance costs substantially. In fact, you could lower your collision and comprehensive coverage cost by 15 to 30 percent by raising your deductible from $200 to $500, according to the Insurance Information Institute. Moving to a deductible that’s $1,000 could save you 40 percent or more.
Learn more: How to find the best cheap auto insurance
Auto insurance coverages
Broadly speaking, auto insurance provides coverage for property damage or theft, liability coverage for expenses related to the bodily injury or property damage of others, and medical coverage for the cost of injuries, rehabilitation, lost wages or funeral expenses.
Required auto insurance coverage varies by state, but nearly all states require drivers to purchase basic auto liability insurance.
A basic auto insurance policy includes six different coverages:
- Bodily injury liability: When you (or someone driving your car) causes an accident, this pays for injuries to other people, including other drivers, passengers and pedestrians.
- Personal injury protection: This covers treatment of injuries for the driver and passengers of the policyholder.
- Property damage liability: This covers any damage to someone else’s property.
- Collision: Helps pay to repair or replace your vehicle if it’s damaged in an accident with another vehicle or object. This coverage is typically afforded after paying a deductible.
- Comprehensive: This covers any damage that happens outside of collision with another car or object, such as an earthquake, vandalism, hail, flood or accident involving an animal.
- Uninsured or underinsured motorist bodily injury coverage: Helps pay the medical costs for you (or others hurt in your car) if you’re in an accident caused by an uninsured driver or by someone carrying bodily injury liability limits that are too low to cover the actual damages.
- Uninsured and underinsured motorist property damage Coverage: Helps pay for your vehicle repairs (or replacement) if you’re in an accident caused by an uninsured driver or by a driver whose Property damage liability limits are too low to cover the actual damages.
Auto insurance rates vary by region
How much you’ll pay for auto insurance, and how much coverage you’ll need, depends heavily on where you live.
New Jersey drivers pay an annual average of $1,309.29 in 2016, the highest among U.S. states, according to a 2018 report from the NAIC. That’s well above the national average of $935.80. Louisiana, New York, Michigan and Florida round out the top five most expensive states for auto insurance, all with annual average cost of $1,250 or more.
Drivers in Idaho pay the least, spending an average of just $599.77 per year. Iowa, North Dakota, South Dakota and Maine round out the five least-expensive states for auto insurance, all with annual average cost of $650 or less.
The large majority of states mandate that drivers carry at least bodily injury and property damage liability. Each state has different required liability limits for all coverages as well.
Keep in mind that the minimum coverage required by your state may not be enough for your situation. It’s important to make sure you have enough protection in the case of an accident.
Gap insurance
Gap insurance is a type of optional car insurance that covers the “gap” between what you owe on the car and what it’s actually worth.
It pays if you lose your vehicle to collision or theft.
For example, let’s say you’re found not at fault in an accident where your vehicle is damaged beyond repair. You still owe $20,000 on your car loan, but the actual value of the car is only $15,000. Gap insurance covers the $5,000 difference.
Not everyone needs gap insurance, but it’s worth considering if you made less than a 20 percent down payment, leased the vehicle or financed for longer than 60 months.
Learn more: Everything to know about gap insurance
Rental car insurance
The rise of peer-to-peer vehicle rental and car sharing alongside traditional car rental services has created a long list of options for consumers looking to rent. It’s also created more issues related to rental car insurance.
Before you purchase insurance through a rental service, it’s important to understand the coverage you may already have. Auto insurance coverages and deductibles that you have on your own car often apply to rental vehicles. Collision damage insurance purchased through your insurance company, for example, may cover you in a rental car.
In addition, your credit card company may provide some coverage, but benefits differ. It’s important to call and check with your credit card company before relying on it for rental insurance.
Traditional brick-and-mortar car rental services typically offer collision damage insurance, liability insurance, personal accident insurance and personal effects coverage. Car-sharing programs often include the insurance cost in the fee, and peer-to-peer services offer a wide range of options.
How to file a claim
The process for filing claims is similar across car insurance companies. This is a request you make to the insurance company for compensation or representation after an accident, regardless of who is at fault.
Here’s the general process for filing claims:
- Call your insurance company as soon as possible after the accident. They will direct you on next steps.
- Gather the documentation needed to file your claim. Your insurance professional will provide you with this information, but it generally includes a “proof of claim” report and a copy of the police report.
- Monitor your claim progress through the insurance company and speak with your claim specialist.
You may want to ask your insurance company about deadlines for filing claims, time limits for resolving claim disputes and when you can expect the insurance company to get in touch with you.
