Best Auto insurance Companies are becoming household names and auto insurance is one of the best ways to protect your auto mobiles from bodily harm and theft, when it comes to
What is Auto insurance and how does it work?
Auto insurance is a form of financial protection that covers a variety of vehicle incidents that could affect you, your vehicle, or others and their vehicle.While most states require a specific minimum amount or type of coverage to be purchased, industry experts typically recommend having more robust financial protection to protect your finances in the event of a costly loss.
Auto policies will cover certain incidents of injury, damage or liability. Coverage limits can be set to satisfy your preferred level of financial protection, though not all coverage types will apply in all states or for all policies. In addition, deductibles are specific to certain coverage types. Because a higher deductible means you are willing to pay more if you file a claim, selecting a higher deductible can lower your premium cost.
More than a dozen rating variables unique to each driver go into determining how much you pay for auto insurance. As each carrier uses different rating factors and weights when underwriting policies, comparing quotes from multiple insurers is often essential in finding the most affordable rate.
While your exact level of coverage will depend on the policy you choose, filing a claim could potentially offer you a payout for loss caused by an uninsured motorist, weather event, occurrence of theft or vandalism, or a multitude of other damaging events. Similarly, if you are involved in an accident with another driver and they are at fault, their auto insurance could help cover your medical expenses and property damage (depending upon the state).
What are the different types of Auto insurance coverage?
Most auto insurance companies offer similar types of coverage, although variations do exist, especially with endorsements, or “add-ons.” Some companies might offer gap coverage as an option, for example, while another company doesn’t. Below are the types of car insurance coverage that most companies offer:
Almost always required by law
In most states, drivers are legally required to carry at least certain minimum limits of these coverage types:
- Bodily injury liability coverage pays for the injuries that you cause to others in an at-fault accident.
- Property damage liability coverage pays for the damage you cause to another’s vehicle or other property (like a fence, pole or building) in an at-fault accident.
Sometimes required by law
- Uninsured and underinsured motorist coverage pay for injury and damage caused by a driver who either lacks sufficient coverage or lacks any coverage at all. The Insurance Research Council’s latest study indicated one in eight U.S. drivers was uninsured in 2019.
- Personal injury protection (PIP), also known as no-fault insurance and offered only in certain states, pays for medical expenses you and your passengers incur following an accident, regardless of fault. It also accounts for non-medical expenses incurred as a result of an accident, such as lost wages or the cost of childcare. PIP is typically required in no-fault states.
- MedPay is similar to PIP insurance coverage but includes only payments for medical expenses. It is required in some states and optional in others.
Required if you have a loan or lease
If you finance or lease your car, your financial institution will likely require that you have a “full coverage” policy, which includes the following coverage types and adds coverage for damage to your vehicle:
- Collision coverage pays for damages to your vehicle caused by a collision. If you collide with another car, a tree, a pole, a building or a pedestrian, your collision coverage is the part of the policy that will pay for the damage to your vehicle.
- Comprehensive coverage pays for damage to your car caused by non-collision losses like theft, vandalism and storm damage. Comprehensive also pays for damages caused by hitting an animal and cracked windshields. According to the Triple-I, approximately 80% of drivers carry this optional coverage.
However, there are more types of car insurance coverage available to you that may be worth discussing with your insurer. Additionally, each state has its own car insurance laws and each driver has a unique situation. Talking with a licensed agent can help you determine the best coverage types and limits for your needs.
How much does car insurance usually cost?
When answering the common question “how much is car insurance,” it’s important to know that rates are highly dependent on the personal rating factors and vehicle information drivers provide when submitting for a quote. However, you can still use the national average as a helpful point of comparison when evaluating your quoted rate. Nationally, full coverage policies average $1,655 per year. “Full coverage” refers to a policy that includes liability, collision coverage and comprehensive coverage.
Outside of your selected policy type — minimum or full coverage — other factors will significantly influence your final cost. Insurers base car insurance rates on a perceived level of risk, which means that the following factors (and more) can impact your premium:
- Driving record: If you have a history of accidents, tickets or DUI convictions, you’ll likely pay more for coverage, because insurers view you as more likely to file a claim in the future.
- Age and driving experience: Younger drivers tend to have less experience on the road, which means accidents are more likely. Generally, the older you are, the less you’ll pay. Hawaii, however, does not allow insurance carriers to use age as a rating factor.
- State and city: Different states have different insurance laws, different accident statistics and different costs of living. Even your city and ZIP code (in most states) can influence how much you pay.
- Coverage types and levels: Choosing fewer coverage types and lower limits will generally mean a lower premium, but it also means less financial protection. If you have lower limits and you’re in an accident, you could be facing higher out-of-pocket costs.
- Vehicle make and model: Each make and model of vehicle has unique features which impact the likelihood of accidents, the severity of accidents and the cost to repair the vehicle itself. Because of this, each vehicle will cost a different amount to insure.
- Credit-based insurance score: In most states, your credit tier is used to determine how likely you are to file a claim. Drivers with lower credit scores generally pay higher premiums.
- Insurance lapse history: Because most states require drivers to have at least minimum levels of coverage, lapses in insurance can result in higher premiums when you take out a policy again.
Best Auto Insurance Companies
USAA pairs robust products with stellar customer service and financial strength. If you qualify for coverage, USAA could be the best provider for your needs. In fact, USAA tied as a winner of the Bankrate Awards for being the best auto and home insurance company overall, based on industry assessment. USAA offers several types of insurance, including auto, home and life, with added military-centric benefits that extend past the standard coverage. Coupled with its standout offerings are additional banking products, company services like vehicle loans and a strong focus on giving back to military families, caregivers and minority communities.
- Low average auto and home premiums
- Excellent financial strength ratings
- Outstanding customer service scores
- Only available to military members and qualifying family members
- Few physical locations
State Farm, the largest U.S. property/casualty insurer by market share according to the Insurance Information Institute (Triple-I), is also one of the most well-respected insurance companies in the nation. The company earned a Bankrate Award for its three primary product lines: auto, home and life insurance. In the 2022 Bankrate Awards, State Farm tied with a few other insurers for best overall auto insurance and best overall home insurance. In terms of life insurance, State Farm claimed the title of the best term life insurer.
- Won Bankrate Awards for auto, home and life insurance due to the company’s excellent customer service, competitive average premiums, accessible agents and easy-to-use policy management tools.
- J.D. Power scores show a high level of customer satisfaction.
- Higher than average policyholder complaints filed with the National Association of Insurance Commissioners (NAIC)
- Gap insurance is not offered as an option on its auto insurance policies
Clearcover’s technology-driven car insurance is reinventing the insurance landscape, making it a clear contender for any driver seeking the best modern auto insurance experience compared to other car insurance companies. The insurtech company’s digital approach allows it to sell highly affordable policies.
Although only currently available to drivers in 20 states, Clearcover is disrupting the auto insurance market by putting technology in the spotlight. The carrier uses artificial intelligence-based digital tools to its advantage, revamping how car insurance is quoted, purchased and serviced. Clearcover’s highly-rated mobile app puts control over managing policies directly in users’ hands. The streamlined approach enables Clearcover to pay most auto claims in less than a week, with some even being eligible for same-day processing.
Geico, owned by Berkshire Hathaway Group, is the second-largest insurance company in the United States. Geico sells numerous insurance products, including home, business, pet and life insurance, although it is most widely known for its auto insurance. Geico is one of the cheapest car insurance companies in the nation, with an average full coverage premium of $1,405 per year, according to data pulled from Quadrant Information Services. This is well below the national average annual full coverage car insurance premium of $1,674.
Best Auto Insurance Companies will vary from each other because each insurer will weigh each factor differently, getting multiple quotes helps ensure you choose your best option for cost and coverage.