How to choose the best car insurance company

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Understanding how to choose the best car insurance company not only prepares you to make a smart financial decision, but it could help save money on your insurance policy premiums. Car insurance is an essential tool for protecting your finances and — with the right planning — can be affordable within a variety of budgets. The average cost of car insurance in the U.S. is $1,674 per year for a full coverage policy, based on 2021 data from Quadrant Information Services. Alongside price, it is equally important to understand how to choose the best provider for your needs.

How to choose the best car insurance company

Although almost every state legally requires drivers to carry auto insurance, except in New Hampshire and Virginia, a policy is uniquely personal. Not only is each individual’s needs different, from coverage choices to budget, but insurance carriers also have different strengths. When shopping for insurance, there are numerous factors to consider, and the emphasis placed on each factor depends on what you need as an individual.

1. Determine your unique needs

To know how to choose the best car insurance company, you must first determine your unique needs and financial situation. For example, do you have a teenage driver to add to your policy? If the answer is yes, finding an insurance provider offering both full coverage and discounts may be more important to you.

Perhaps you or someone in your immediate family is a member of the military. Then, it may be more important for you to find a carrier that works with you during possible deployment or offers military discounts. Evaluating your personal circumstances may help narrow down the selection of carriers and help you focus on one offering the coverage options you need.

2. Find providers within your area

Finding providers in your area may be useful because some car insurance carriers only write policies within a certain local or regional area. There are potential benefits and drawbacks to using a regional carrier versus one available in all states. Using a regional carrier often means a more personalized experience from a local agent. However, you may not have all the advanced digital tools, such as a mobile app for policy management, as most of the large national carriers provide.

National carriers have benefits worth considering too. Most offer a large variety of discounts and policy personalization options while giving you several ways to access customer service. However, not all national carriers have local agents available if you like working one-on-one with a licensed insurance professional.

3. Check trusted third-party ratings

Fortunately, drivers do not have to guess which providers are backed by strong financial ratings or positive customer service marks. There are verified third-party ratings available to take the guesswork out of it. Using third-party data in your research provides a more well-rounded approach to choosing a provider and gives you unbiased data for your review.

Rankings such as ones from J.D. Power, provide independent, unbiased ratings regarding the customer experience with popular car insurance providers. AM Best is another example of a third-party company that provides further analysis of an insurance carrier’s performance. Specifically, AM Best reviews a carrier’s overall financial health and strength.

4. Consider the insurance experience

Another aspect worth emphasizing is the overall customer experience and interaction with a carrier. If you ever need to update your policy, submit a claim or speak to an agent over the phone, the experience may either be easy or feel more stressful than it needs to be.

You could judge a carrier’s customer experience based on three categories:

  • Accessibility: Take a look at the digital tools, including the reviews, as well as customer service hours. If you need to submit a claim, create a quote or make policy changes, think about which method you prefer and how accessible the carrier is based on your preference.
  • Digital management: If managing your policy via a smartphone or online is important to you, take time to review the mobile app, online support and digital proof of insurance options. If this is a priority for you, but is not offered by a carrier, then you may want to consider another company.
  • Claims: If you ever need to submit a claim, it helps to make sure the carrier you choose gives you multiple options for filing, such as online, over the phone via customer service representatives or through an app. Additionally, you could review the financial strength ratings to see the likelihood of your claim being reliably paid out.

5. Compare quotes based on coverage

Rates can vary drastically from one carrier to another based on a variety of reasons, including a carrier’s parameters around a driver’s vehicle, driving history and ZIP code. Not only does comparing carriers highlight the difference in rates, but it also shows which carriers offer the coverage options and discounts you are looking for. Be sure to compare quotes based on the same policy type and coverage options so you can know you are getting the most accurate representation of cost.

When comparing quotes, it is helpful to know the difference between minimum and full coverage policies, since this impacts cost and coverage. A minimum policy is one where you only purchase minimum liability coverage limits to meet your state’s legal driving requirements for protecting other drivers. A full coverage policy typically refers to coverage for damage to your vehicle, which entails both collision and comprehensive coverage. Other options that may be worth looking into include:

  • Roadside assistance
  • Rental reimbursement
  • Full glass repair
  • Gap insurance

Frequently asked questions

What is the best car insurance company?

The most effective method to find the best car insurance company is by comparing multiple carriers available in your area. Not only does it help to compare rates, but looking at customer service reviews, financial strength ratings, coverage options and your needs can help narrow down the best car insurance company for your situation.

How much car insurance do I need?

Almost all states have a minimum legal requirement for you to carry liability insurance, except New Hampshire and Virginia. In addition to the minimums, insurance professionals typically recommend you purchase the highest amount of coverage you can afford within your budget, which can offer greater financial protection.

What is the best way to save on car insurance?

Comparing quotes not only helps you choose the best car insurance company, but it also shows you which one offers the least expensive rates. Other ways to save on premiums include taking advantage of as many discounts as possible and reducing your annual mileage.

Written by
Sara Coleman
Insurance Contributor
Sara Coleman has three years of experience in writing for insurance domains such as Bankrate, The Simple Dollar, Reviews.com, Coverage.com and numerous other personal finance sites. She writes about insurance products such as auto, homeowners, renters and disability.
Edited by
Insurance Editor