January 4, 2022

The Best Auto Insurance of [year]

The lowest rate for the most reliable coverage

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The cost of auto insurance isn’t so clear-cut; there are no one-size-fits-all policies. Rather, underwriters base premiums on many factors — some in your control, like what state you live in, and some out of your control, like your age.

That’s where we come in. We’ve compiled millions of data points to bring you the best auto insurance providers of the year, whether you’re a young adult, a homeowner, or an Uber driver. Find the best rates from trusted companies below.

How Does Car Insurance Work?

Here’s how car insurance works:

  1. You enter a contract with the insurance provider that protects you against losses if you’re involved in a car accident or theft.
  2. You’ll pay a premium, usually monthly, to uphold your coverage. You’ll also set up a deductible, the amount you’ll pay to repair your car before your insurance provider contributes.
  3. If you’re in a primary at-fault car accident, meaning you hit someone else’s car or property, you’ll file a claim with your insurer.
  4. Your insurer may accept or reject your claim. If they accept it, they will reimburse you for your losses, such as bodily injuries or property damage, after you meet your deductible. If they reject it for some reason, like because it’s not covered, you’ll have to pay out of pocket.

Is Car Insurance Worth It?

Car insurance is not only worth it in cases of major accidents, thefts, or damages, but also legally necessary. Almost all states in the U.S. require some form of auto insurance to protect against bodily injury liability and property damages liability, typically. However, beyond the minimum state requirements, you’ll have to decide for yourself how much coverage you need.

How Much Car Insurance Do I Need?

To decide how much car insurance you need, first, check out what your state requires to make sure you’re complying. Then, you can add on supplemental coverage as you see fit.

Types of Car Insurance Coverage

All states require:

  • Property damage liability: Property damage liability will reimburse you for any damage that you or someone else driving your car caused to another vehicle or property like a building. For example, it might kick in if you run into a mailbox.

All states except Florida and New Jersey require:

  • Bodily injury liability: Bodily injury liability is coverage for any injuries or deaths that you or another driver caused while driving your car. So if you accidentally hit a pedestrian, you’re liable, meaning you have to cover their medical costs. But if the person’s injuries are more than your insurance covers, you could be sued for the additional costs.

Did You Know

The average minimum bodily injury liability per state is $25,000 for an accident involving one person, or $50,000 for an accident involving two or more people.

Some states also require medical payments or personal injury protection, uninsured motorist coverage, and underinsured motorist coverage.

  • Medical payments or personal injury protection: Medical coverage or personal injury protection (PIP) reimburses you for medical expenses for any injuries that happened to you or your passengers, or any wages you lost because of said injuries. PIP is required in “no-fault” states.
  • Uninsured/underinsured motorist coverage: Even though auto insurance is required in all states except New Hampshire and Virginia, not everyone complies. If you’re in an accident with another driver with no or insufficient insurance, or you’re involved in a hit-and-run, uninsured/underinsured motorist coverage will pay for a serious accident.

To see your state’s requirements, read our auto insurance guide.

Supplementary Auto Insurance Coverage

Once you’ve hit the minimum requirements, you can decide which additional coverage you want. These are your choices:

  • Accidental death and dismemberment: AD&D coverage will give you or your beneficiaries money if you die or have a permanent impairment as a result of a car accident, covering the loss of sight, speech, limbs, and the like.
  • Classic car: Classic and vintage cars require supplemental coverage, as their parts are hard to find and replace.
  • Collision: Property damages coverage will not cover incidents if you’re at fault; that’s why some people add on collision insurance. It covers any accident where your car hits something (even a pothole) and you’re at fault.
  • Comprehensive: Comprehensive coverage provides coverage against more natural events such as fires, falling rocks, and floods. Essentially, it covers any thefts or damages that don’t fall under collision coverage, such as vandalism (like if your car gets smashed in a riot).
  • Custom equipment: If you have any aftermarket products, like a dashcam or sound system, that have been stolen or damaged, custom equipment coverage will kick in. Aftermarket products are any components that your vehicle’s manufacturer didn’t install.
  • Emergency road service: If your car stops working and you’re stranded, emergency road service coverage will reimburse you for towing, lockout services, battery jumps, and the like.
  • Gap: Gap coverage ensures that if your car is totaled or stolen, you can get back what you paid for the car, not what it’s worth currently. This applies only to owned cars, not leased cars.
  • Glass: We recommend getting glass coverage, which handles the costs of windshield damages.
  • Mechanical breakdown: Mechanical breakdown coverage only applies to new cars under certain mileage limits, although you may be able to renew it after the coverage runs out. It covers all repairs to a car’s mechanical parts, save for maintenance and wear-and-tear, after you’ve paid your deductible.
  • New car replacement: Similar to gap coverage, new car replacement coverage will protect your new car from depreciating in value. However, it only applies in certain situations:
    • You already have comprehensive and collision coverage.
    • Your car has less than 15,000 miles on it.
    • Your car is under a year old.
    • You’re the first owner of your car.
    • Your car is not a lease.1
  • Optional basic economic loss: OBEL adds anywhere from $25,000 to $50,000 in coverage for economic losses. You can decide what it applies to based on your needs — loss of income, rehab, physical therapy, etc.2
  • Rental reimbursement: If your car is being repaired under a covered claim, rental reimbursement will cover any rental car costs. If you don’t have another mode of transportation, we recommend getting rental reimbursement coverage.
  • Ride-sharing: Any Uber or Lyft drivers will have to add on ride-sharing coverage, as traditional auto insurance doesn’t cover commercial activities.
  • Towing/labor: If your car breaks down and you need to get it towed, you can get that covered as well.
  • Transportation/travel expense: Finally, transportation/travel coverage will reimburse you for any transportation, lodging, or meals you paid for if your car wasn’t drivable because of damage made more than 50 miles from your home. However, the damages must already be covered by collision/comprehensive coverage, and mileage, gas, and security deposits still won’t be covered.

How Much Is Car Insurance?

Most people want to know, first and foremost, how much car insurance costs. We’ll get to the average cost, but first, let’s define what makes up the costs in the first place.

Premiums vs. Deductibles

A premium is the amount you’ll pay your insurer annually, biannually, quarterly, or monthly to uphold your coverage. Your deductible is what you’ll pay out of pocket for a covered claim before your insurance provider contributes. Most policies have multiple deductibles, and you’ll be able to choose your deductible with your insurance agent. Learn more about how deductibles work.

FYI

The larger your deductible is, the lower your premium is, and vice versa.

Average Cost of Car Insurance

The average cost of car insurance

Factors That Impact Cost

Here are some factors that affect car insurance costs:

  • Age: Teen drivers are more expensive to insure than those 25 and up, as they’re more likely to be first-time drivers and get into accidents. That’s why we’ve compiled the best cheap auto insurance for young drivers, the best auto insurance for young drivers, the best auto insurance for teens, and the best auto insurance for seniors. Learn more about how much auto insurance for teens costs.
  • Years driving: People with longer driving histories have lower rates, so a brand-new 30-year-old driver may pay similar rates to a 16-year-old.
  • Coverage: Depending on your state requirements and what supplemental coverage options you purchased, your coverage costs could vary greatly.
  • Credit history: Similarly, buying auto insurance with bad credit can increase the cost of premiums. However, in states like Massachusetts, Michigan, Hawaii, and California, factoring credit history into auto insurance premium rates is illegal. Learn more about auto insurance and credit scores.
  • Deductible: You’ll also choose your deductible, but remember that if you choose a lower deductible, your premiums will increase.
  • Driving record: If you’ve ever needed auto insurance with a DUI or auto insurance with a bad record, you know that your rates will be much higher than if you had clean driving records and were a good driver.
  • Gaps in coverage: If you didn’t have auto insurance for a certain period, that could increase your rates.
  • Home address: Those living in urban areas will pay more for auto insurance than those in suburban or rural areas, as densely populated places have higher rates of vandalism, accidents, thefts, and claim incidents. If you move states, that could change the minimum requirements, crime rates, population density, weather, and road conditions, which could also affect your premium costs positively or negatively.
  • Homeownership: Those who own their homes get lower rates than renters if they bundle their auto insurance with homeowners insurance.
  • How often and the distance you drive: If you have a long commute, you may have to pay more for coverage; you’ll generally pay less if you drive less or take public transportation.
  • Marital status: Those who are married get lower rates on auto insurance than single, widowed, and divorced people. If you’re married, we recommend combining policies to save money.
  • Military or veteran status: Some auto insurance providers offer discounts to active military personnel or veterans. Check out the best auto insurance for the military.
  • Sex: In 2019, men made up 71 percent of the people killed in car accidents in the U.S., despite being only half of the population.3
  • Vehicle: Every vehicle has a vehicle safety rating based on previous claims and industry safety reports that determines how susceptible it is to damages, injuries, and theft. Safer vehicles are cheaper to insure.

How to Save on Car Insurance

As you can see, so many factors go into the cost of auto insurance, some of which are out of your control. However, there are ways to save on auto insurance, such as raising your deductible, dropping supplemental coverages, or bundling your insurance with another type of insurance. You can also take advantage of discounts, which vary by provider.

Car Insurance Discounts

Many auto insurance providers offer discounts for things like anti-lock brakes, driving classes, and annual payments. Here are some other types of discounts we’ve seen from providers:

  • Accident-free
  • Low annual mileage
  • Annual payment
  • College credit
  • Continuous insurance
  • Defensive driver course
  • Driver training
  • Driving history/habits
  • Early quote
  • Early signing
  • Family discount
  • Federal employee
  • Good student
  • Homeownership
  • Hybrid/electric vehicle
  • Membership/employee
  • Military
  • Military installation
  • Multi-car
  • Multi-policy
  • New car
  • Paid in full / good payer
  • Paperless/automatic billing
  • Safe driving
  • Student away from home
  • Teen driver monitoring (GPS)
  • Vehicle safety equipment
  • Vehicle storage

How to Find the Best Car Insurance Company

To find the best car insurance company, you’ll need to determine what companies cover and offer. For example, some companies won’t cover high-risk drivers, and not all companies offer supplemental coverage like classic car or ride-share coverage. But first, let’s look at some of the most popular providers in the U.S.

The Biggest Car Insurance Companies

The most popular auto insurance companies in the U.S. are State Farm, Berkshire Hathaway, Progressive, and Allstate, with a combined 54 percent of the total market share. See more of the biggest providers below.

Leading private auto insurance providers by premiums in 2020 Percentage of market share
State Farm Mutual Automobile Insurance 16%
Berkshire Hathaway Inc. 14%
Progressive Corp. 13%
Allstate Corp. 10%
USAA Insurance Group 6%
Liberty Mutual 5%
Farmers Insurance Group of Companies 4%
Nationwide Mutual Group 2%
American Family Insurance Group 2%
Travelers Companies Inc. 2%4

How to Compare Companies

To compare car insurance companies, pay special attention to these factors for each provider:

  • What states it covers
  • Who is eligible (those with poor credit, poor driving records, teens, veterans, etc.)
  • The types of vehicles it covers
  • Average premiums
  • Coverages and services available
  • Discounts available
  • Mobile app ratings
  • Other types of insurance it offers
  • Third-party ratings from the Better Business Bureau, AM Best, J.D. Power, etc.

We recommend reading our auto insurance reviews and pricing pages to do your research. You can also read about how to find cheap car insurance companies.

How to Get Car Insurance

Once you’ve found a provider you like, how do you get car insurance?

  1. Contact the company to connect with an agent.
  2. Decide whether you want a single or split limit. A split limit is three numbers that describe the maximum bodily injury payment per person, the maximum bodily injury payment per accident, and the total property damage per accident. Essentially, the insurance provider will cover each event up to a certain point. In contrast, a single limit is one number that covers all bodily injuries and property damages, but split limits are much more common and more affordable.
  3. Choose your coverages and deductibles.
  4. Pay the premium. Your insurance coverage will begin on your effective date.

Advice From Car Insurance Experts

We talked to Zachery Cullen, one of the insurance agents in our local network with 12 years of experience, to explain some of the concepts we get asked about the most.

The Claims Process

When it comes to auto insurance claims, it’s important to know what to expect. Most car insurance claims take 30 days to be processed, depending on the accident’s severity and nature, whether there were injuries, and other factors like the state-mandated time frame.

Teen Drivers

It’s no secret that teen drivers are more difficult to insure, so Cullen recommends adding them to preexisting policies. You can also get discounts for having a multi-car policy, the teen getting good grades or taking a safe driving course, and more. Plus, if they get a ticket or DUI, you’ll be informed. Of course, there’s also a negative side: If the teen gets into an accident, your premiums could increase by up to 20 percent.

Here are the average insurance rates for teen drivers in California as of January 2020:

Company Average insurance rate for teen drivers
Allstate $4,112
Farmers $9,248
Geico $1,695
Nationwide $2,857
Progressive $3,478
State Farm $2,462

Despite the drawbacks, adding a teen to your preexisting policy is still the best way to save money on teen auto insurance.

Car Insurance Research

Here are some of the most interesting facts and statistics from our extensive auto insurance research:

  • In 2018, U.S. consumers spent around $240 billion on auto insurance.
  • In 2021 and 2020, overall satisfaction with the auto insurance industry was rated at 835 out of 1,000.
  • Only 52 percent of auto insurance customers knew about COVID-19 premium relief efforts.
  • 34 percent of auto insurance customers said they’re willing to try usage-based insurance or telematics that track safe driving habits and miles driven. Now, only 16 percent of customers use telematics.
  • 45 percent of customers would switch auto insurance providers if they could save up to $200.5
  • Despite state requirements, 13 percent of all drivers in the U.S. are not insured.6

Read our research on senior driving statistics and Labor Day accident statistics to learn more interesting facts.

Auto Insurance FAQs

Read on for answers to the questions we get the most.

What are the rules of auto insurance?

The rules of auto insurance differ by state, but most states require property damage and bodily injury liability. Exceptions include Florida and New Jersey which don’t require bodily injury liability, and New Hampshire and Virginia which don’t require any auto insurance but instead, fees. Some states also require medical payments, personal injury protection, uninsured motorist, or underinsured motorist coverage.

How does car insurance work when you are at fault?

How car insurance works when you are at fault depends on what state you’re in. In no-fault states, your car insurance may cover the accident or damage through medical payments or personal injury protection. However, if you don’t have collision coverage and you’re not in a no-fault state, then you’ll have to pay for the repairs out of pocket. As of October 2021, these are the no-fault states:

  • Delaware
  • Florida
  • Hawaii
  • Kansas
  • Maine
  • Massachusetts
  • Michigan
  • Minnesota
  • New Hampshire
  • New Jersey
  • New York
  • North Dakota
  • Oregon
  • Pennsylvania
  • Utah

Can someone drive your car without being on the insurance?

Someone else can drive your car without being on the insurance, as long as they have your permission. With permissive use, your insurer will cover any damages that the driver caused, even if they’re not on your insurance policy. However, some companies drop the coverage down if the driver isn’t a named insured.

How long after getting car insurance can you use it?

How long you can use your car insurance after getting it depends on the effective date in your policy. You can request this effective date when you sign up for your policy with your agent; it can be on the same day or within 30 days.

Citations

  1. What is New Car Replacement™? Liberty Mutual. (2022).
    https://www.libertymutual.com/vehicle/auto-insurance/coverage/new-car-replacement-insurance

  2. Professional Insurance Agents. (2022).
    https://pia.org/.

  3. All Victims. NHTSA. (2022).
    https://www-fars.nhtsa.dot.gov/People/PeopleAllVictims.aspx

  4. Market share of leading writers of private passenger auto insurance in the United States in 2020, by direct premiums written. Statista. (2021, Sep 8).
    https://www.statista.com/statistics/186523/top-us-private-passenger-auto-insurance-writers-by-market-share/

  5. Auto Insurance Customer Satisfaction Stalls Despite $18 Billion in Premium Relief, J.D. Power Finds. JD Power. (2021, Jun 15).
    https://www.jdpower.com/business/press-releases/2021-us-auto-insurance-study

  6. Monitoring Availability and Affordability of Auto Insurance; Assessing Potential Evolution of the Auto Insurance Market. Federal Register. (2021, May 27).
    https://www.federalregister.gov/documents/2021/05/27/2021-11167/monitoring-availability-and-affordability-of-auto-insurance-assessing-potential-evolution-of-the