Small auto insurance companies

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As of 2019, there were nearly 2,500 property and casualty insurance companies in the market. If you are shopping for auto insurance coverage, you will need to decide to get coverage from either a large insurance company or a smaller provider. Typically, small insurance companies often have better customer service, but sometimes have higher average rates.

For example, Erie, a regional provider, has an average rate of $1,233 for full coverage insurance. Allstate, which is one of the biggest providers, has an average full coverage rate of $1,921 per year. While large car insurance companies are usually more popular, there can be perks to purchasing an auto insurance policy from a small company.

Advantages of small auto insurance companies

For certain drivers, purchasing an auto policy from a small insurer is a good option. Working with a small insurance company has several advantages compared to working with a large insurance company. Here are some of the most significant upsides to small car companies:

Personalized customer service

Small insurance companies usually have better customer service than large insurance companies. More importantly, the service is often more personalized, so your insurance agent will know your name, and you will likely have a better experience with claims adjusters.

More affordable rates

Some small auto insurance companies can offer cheap insurance rates because they do not spend as much money on staffing and advertising. However, it is important to note that this is not always the case. It is also possible that a local insurance company will offer higher rates than a national insurance company.

Supporting a local business

One of the main reasons many drivers like working with local car insurance companies is that they can support a local business. The money they pay in premiums goes back into their community, as opposed to a huge corporation.

Specialized coverages

If you choose a local auto insurance company, you might be able to get more specialized coverage. For example, if you buy car insurance from a company that exclusively serves California drivers, they might offer higher coverage limits for earthquake or wildfire damage.

Disadvantages of small auto insurance companies

There are a handful of disadvantages to working with a smaller auto insurance company. First, small insurance companies usually sell coverage in a limited area. That means you will need to shop around for local insurance companies that serve your city and state.

In addition, small insurance companies usually do not have the most up-to-date tools and technology, like a mobile app or online claim reporting. You might also find that some local auto insurance companies are more selective in their eligibility, which might make it more challenging to get approved for coverage.

Car insurance rates with a smaller company

Car insurance rates from small insurance companies differ significantly. You can find cheap rates from small insurance companies, but it is not a guarantee. Some small insurance companies charge higher rates because they have a smaller customer base and less revenue.

The two tables below highlight insurance premiums from five of the largest carriers by market share and compare rates from some smaller carriers. Remember that these insurance quotes are averages based on a sample quote, so your actual rate will vary.

Average rates from largest auto insurance companies

Large auto insurance companies Average full coverage premium
Travelers $1,325
Geico $1,405
State Farm $1,457
Progressive $1,509
Allstate $1,921

Average rates from small auto insurance companies

Small auto insurance companies Average full coverage premium
Plymouth Rock $959
Erie $1,233
Auto-Owners $1,351
Amica $1,378
Alfa $2,085

Ways to save with a small auto insurance company

If you go with a small auto insurance company, there are some ways you can potentially save money on your premium. Here are a few suggestions:

  • Look for discounts: Research local auto insurance companies that offer discounts you can take advantage of. The more discounts you qualify for, the more money you can save.
  • Pay in full: Consider paying your annual premium in total, which can usually help you get a better rate. Some insurance companies even offer savings if you enroll in automatic payments or sign up for paperless billing statements.
  • Build your credit score: Work on improving your credit score as a way to save money on car insurance. Drivers with a poor credit score pay the highest rates in most states, so improving your credit is often an effective way to get a cheaper rate. Keep in mind that some states do not allow insurance companies to factor in your credit score when calculating your rate.
  • Participate in a telematics program: Many insurance providers will lower your rate if you participate in its telematics program. Most telematics programs use an app or device to track your driving and reward you for being safe or driving fewer miles.
  • Bundle your policies: If you have two or more insurance policies, consider bundling them with the same company to save money. Many small insurance companies offer a discount for bundling your auto and home, renters or condo insurance policy.

Coverage options with small auto insurance companies

Whether you choose a small insurance company or a large provider, the auto insurance coverage options will be essentially the same. All insurance companies will offer the basics, including state-minimum liability coverage, collision, comprehensive, medical payments and personal injury protection (PIP) if you live in a no-fault state.

Typically, small insurance companies offer popular endorsements, like gap insurance, roadside assistance and rental car reimbursement. However, you may find that local insurance providers offer fewer unique endorsements, like special coverage for hybrids or new car replacement coverage, compared to large companies.

Local insurance companies

We should point out that the definition of a small insurance company is not one-size-fits-all. A small insurance company could serve an entire region of states, like the ones on our list above, or apply to a provider that only serves one very small area.

For example, Edison Insurance only sells auto insurance coverage in Florida, Maine Coast Insurance Agency sells coverage throughout Maine, and Nia Insurance sells coverage in the Omaha, Nebraska area.

When shopping for your next auto insurance policy, you might consider looking into local insurance companies during your search. We recommend checking out local insurance providers if you value good customer service or prefer to work with an insurance agent.

Frequently asked questions

What is the best car insurance company?

The best car insurance company is different for every driver. It depends on where you live, what type of coverage you need, your budget and what you value in an insurance company. To find the best car insurance company for you, we recommend shopping around and comparing providers based on your criteria, keeping in mind that the cheapest car insurance companies are not necessarily the best.

How much does car insurance cost?

In the United States, the average cost of car insurance is $565 per year for a minimum coverage policy and $1,674 per year for a full coverage policy. However, the actual rate you pay depends on factors like your age, state, claims history and the type of car you own.

How much car insurance do I need?

Car insurance is required in almost every state, and you must carry the minimum amount of insurance required in your state to drive. You will typically be required to have personal liability insurance, including bodily injury and property damage liability coverage. If you live in a no-fault state, you will also need personal injury protection (PIP). Most insurance experts recommend purchasing more car insurance than the minimum amount required. You should consider your circumstances when determining how much car insurance coverage you need. Minimum coverage car insurance will not cover damage to your vehicle if you cause an accident, for instance. Speak with your insurance agent to determine how much car insurance is right for you.

How can I be sure a small car insurance company can pay my claim?

With a smaller insurance company, you may be concerned that it does not have sufficient cash flow to compensate you after a claim. To evaluate an auto insurance company’s financial strength, we recommend looking at their ratings from AM Best, Standard and Poor’s and Moody’s. These organizations score and rate insurance companies based on their balance sheet, debt and financial obligations, which indicates a strong history of being able to pay customer claims.

Methodology

Bankrate utilizes Quadrant Information Services to analyze rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverages that meet each state’s requirements. Our sample drivers own a 2018 Honda Accord, commute five days a week and drive 12,000 miles annually.

These are sample rates and should be used for comparative purposes only. Your quotes may be different.

Written by
Elizabeth Rivelli
Insurance Contributor
Elizabeth has two years of experience writing for insurance domains such as Bankrate.com, The Simple Dollar, Coverage.com and NextAdvisor, among others. In addition to auto insurance, Elizabeth regularly writes about home insurance, renters insurance and life insurance. She also covers industry trends and general insurance education.
Edited by
Insurance Editor