Car insurance is a necessary expense for most Americans, since driving without it is illegal and public transportation options are limited outside of major U.S. cities. Insuring a vehicle can be costly, especially if you’re a new driver or insuring a luxury car, but it can save you tens of thousands of dollars in case of damage or theft.
The ideal car insurance company combines good coverage with reasonable rates and excellent customer service. Although cost matters when shopping for car insurance, it shouldn’t be the only factor. You’ll want to choose a company with a high customer satisfaction rating. That way, the process is smooth and hassle-free when you need to file a claim. At the same time, a good car insurance company will offer plenty of discounts to incentivize good customers.
So what’s the best car insurance company? That depends on a variety of factors. Below, CNBC Select breaks down the top car insurance companies into five main categories. (See our methodology for more information on how we chose the best car insurance companies.)
Best car insurance companies
Best overall: Geico
Best for wide coverage: Nationwide
Best for customer satisfaction: State Farm
Best for discounts: Farmers Insurance
Best for military members and veterans: USAA
Geico is the best car insurance company for affordable coverage, offering the lowest average premiums for both minimum and full coverage. It also enjoys a relatively high J.D. Power score for customer satisfaction, an A++ ranking from AM Best and an A+ rating from the Better Business Bureau (BBB). Finally, Geico has a wide range of insurance products, including homeowners insurance and renters insurance, that make it easy to bundle and save on coverage.
Average annual premium for minimum coverage: $365
Average annual premium for maximum coverage: $1,297
Best for wide coverage
Nationwide offers one of the widest car insurance networks, with coverage available in 47 states and the District of Columbia (all states except Alaska, Louisiana and Massachusetts). This is an important distinction because multiple companies competing for your business equals lower premiums.
When it comes to coverage, Nationwide offers some of the lowest average car insurance rates for maximum coverage and some of the highest for minimum coverage. If you can bundle your insurance products and save on overall coverage, Nationwide could be a solid choice for you.
Average annual premium for minimum coverage: $549
Average annual premium for maximum coverage: $1,383
Best for customer satisfaction
USAA stands out for enjoying high rankings on multiple factors. For starters, it offers the lowest average premiums. Equally important is customer satisfaction as no one wants to deal with a difficult customer service experience when filing a claim. Luckily, USAA enjoys the highest J.D. Power customer satisfaction scores, so you know you’re “in good hands.”
The only catch? It’s not available to everyone — only military members, veterans and their immediate family members are eligible for a USAA car insurance policy.
Average annual premium for minimum coverage: $354
Average annual premium for maximum coverage: $1,209
How does car insurance work?
Car insurance covers damage, theft and bodily injury in case of an accident. You pay a monthly (or bi-annual) premium based on the coverage and policy type needed. In case of an accident, you can file a claim and your insurance company will pay out damages based on various criteria. Filing claims can sometimes lead to higher premiums, so you’ll want to do so cautiously. Car insurance companies offer lower premiums to drivers with clean records, as they’re less likely to file damage claims.
What are the different types of car insurance coverage?
Car insurance has five main types of car insurance coverage you can incorporate into your policy. Each one offers varying degrees of protection in case of a loss. At a minimum, you will need liability coverage, which protects against damage and bodily injury. Depending on the level of protection you’re looking for, you might want to add additional coverage to your policy. Here’s a look at some of those options:
Liability coverage: Basic coverage that is mandatory in most states. There are two types of liability coverage, protecting a policyholder against personal injuries (bodily injury liability) and property damage (property damage liability).
Collision coverage: Covers repairs stemming from a collision with an object rather than another vehicle.
Comprehensive coverage: Protects your vehicle in case of damage caused by non-vehicular collision. Covered events include theft, weather-related damage and vandalism.
Personal injury protection: Pays your medical expenses and lost income from an accident.
Uninsured motorist coverage: Covers your vehicle against hit-and-run accidents.
How can I find the best price on car insurance?
You can find the best price for car insurance by requesting a quote directly from each insurance company’s website. Some aggregators will pull car insurance quotes from multiple companies when you submit a single form.
By shopping around for car insurance, you can find a plan that works best for your budget and coverage needs. You can save money by bundling other products into your policy, such as homeowners insurance and renters insurance.
Can you get a refund on car insurance?
Car insurance is generally paid on either a monthly or bi-annual basis. If you’ve already paid your premium for the policy period and want to cancel it, you’ll generally get a partial refund for the unused portion.
Do car insurance companies check your credit?
Your credit score will factor into your insurance premiums – a better credit score gets you a lower premium. Studies indicate that drivers with high credit scores are less likely to file claims than those with low credit scores. Car insurance companies check your driving and credit history to determine your liability risk.
This inquiry is a “soft pull” that won’t impact your credit score. Before applying for car insurance, you might want to check your credit score using a credit monitoring service such as Chase Credit Journey or CreditWise and take steps to improve your score to secure a lower car insurance premium.
How do car insurance companies pay out claims?
In case of an accident, you can file a claim with your insurance company by calling the claims department. Major insurance companies have mobile apps that allow you to file a claim quickly and upload all the necessary documents in one place.
Car insurance companies pay out claims after investigating and reviewing all related documents. Be sure to consult your policy for any limitations regarding your coverage.
Car insurance is an inevitable, costly expense for most Americans, and many companies compete for your business. Understanding how premiums are priced and requesting multiple quotes can save money while ensuring your vehicle is protected against damage and loss. Factor in customer satisfaction ratings and you’ll increase your odds of being a happy customer if you ever have to file a claim.
To determine the best car insurance companies, CNBC Select analyzed dozens of U.S. insurance companies that come with policies to suit an array of needs.
When narrowing down and ranking the best car insurance companies, we focused on average cost, coverage, availability, ease of use and customer satisfaction using data from the National Association of Insurance Commissioners, AM Best, J.D. Power rankings and car insurance premium data from Bankrate.com.
The average annual premium data is based on a 40-year-old driver with a clean driving record and good credit. The driver insures a 2020 Toyota Camry, commutes five days a week and drives 12,000 miles annually, with 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
After reviewing the above features, we sorted our recommendations by best overall, best for wide coverage, best for customer satisfaction, best for discounts and best for military members and veterans.
Note that the premiums and policy structures advertised for car insurance companies are subject to fluctuate in accordance with the company’s policies.