10 Best Car Insurance Companies of 2021 By Money

Auto insurance is a form of financial protection for you and your vehicle, against theft, collisions, and/or liability. It’s regulated at the state level, so your policy’s minimum liability limits will depend on your local laws. All states, with the exception of New Hampshire and Virginia, require drivers to buy car insurance or at least pay some sort of fee if they’re uninsured.

To assess risk and determine the premium you’ll pay, insurance companies use a wide range of information, like the kind of car you drive, your age, marital status, and whether you own a home, among others.

With so many insurance options and influencing factors, getting quotes and purchasing a policy online can be overwhelming.

“When you go online and there is a lot of terminology you're not familiar with, you may end up buying things you don't need,” said Patricia Pérez, president of American Insurance Brokers. “Auto insurance is not cookie-cutter. It depends on a lot of different things. But insurance agents should have the ability to educate the insured and show them what's available,” she added.

What Drives Premiums Up

Underwriters assess risk to determine the chances of a policyholder filing a claim in the future. There are other factors beyond auto and driver risk that can affect a vehicle’s insurance premiums, including:

• Marital status: Single drivers aren’t considered as safe as married ones.
• Commute: Longer and riskier commutes may raise your premiums.
• Homeowner status: If you rent, you’ll pay more.
• Accidents or tickets: These can run up your payments for three years or longer.

There are also the legal costs you may incur as well as the fees you could be required to pay. The worse the offense, the higher the increase. Not wearing a seat belt, for example, could result in a 5.8% increase. A more serious offense, like a DUI, will increase your premiums up to 71%.

What Determines Your Auto Insurance Premium?

Underwriters assess risk to determine the chances of a policyholder filing a claim in the future. There are other factors beyond auto and driver risk that can affect car insurance premiums, including:

Driving record

A clean driving record without speeding tickets and accidents will keep your premiums low.

Type of car

Everything about your car, from its anti-theft technology to horsepower, will be taken into consideration to determine your premium.

Source: Insurance Information Institute

How You Can Save Money On Auto Insurance

Bundle Insurance Policies

You can bundle policies under one company to save an average of 8% on your combined premiums, depending on the insurer. Typically, drivers combine their car insurance with their homeowners or renters policy.

While having two policies under one roof can be convenient, we still urge you to shop around and make sure you’re actually saving by bundling.

Raise Your Deductible

A deductible is an amount you will pay out of pocket in the event of a collision, before your insurance pays the rest. Deductibles are typically set at $500, but just doubling it to $1,000 can save you 13%. It may be a worthwhile gamble if you don’t drive a lot and aren't accident-prone.

Raising your deductible can be a good way to save money — just be sure you’re making a well-informed decision. A 2018 study showed that 60% of people aged 22 to 37 have put away less than $1,000 in savings. If you’re in that category, then having a high-deductible policy might not be the best money-saving option for you.

Review Your Policy Regularly

Since car insurance premiums are on the rise in many states, reassessing your current policy every year before renewal can ensure you’re getting the type and level of coverage you need and can afford. You don’t even have to wait till your current policy is about to expire, you can shop around at any time.

A study found that in 2019, 72% of drivers said they would switch insurers in order to save money. If you were to find a policy that’s better suited to your needs and want to make the jump, make sure to check your current provider’s cancelation policy. You may be getting a better deal elsewhere, but at what cost? Get all information you need to make a well-informed decision.

Just like auto insurance policies are constantly changing, personal circumstances are also subject to change. Maybe you reached an age where you’re eligible for certain discounts, or perhaps you're considering adding another car?

Whatever the situation, take a close look at your insurance policy and make sure it’s still working for you. If it isn’t, then maybe you should be looking for companies that can offer you more affordable rates. If so, our guide to cheap car insurance is here to help.

Just as with other insurance products, the car insurance industry has been affected by the coronavirus pandemic. Since states went into lockdown in March, and many at-office professions had to shift to working at home, daily driving and commuting came to a halt, leading to fewer drivers on the road, and in turn, fewer accidents.

According to TransUnion, a total of 72% of Americans either have used their vehicle less since the beginning of the pandemic, or haven’t driven at all. An additional 35% of drivers surveyed said that they would likely make changes to their vehicle ownership and/or use, while 37% said that they’d prefer to keep on working at home post-pandemic.

With fewer drivers and lower accident rates, car insurance companies have had to adapt. Since the car insurance industry is prospective, they estimate all auto insurance rates at least a year in advance. As there wasn’t any way for the industry to foresee the pandemic, the rates companies were charging didn’t reflect the actual situations of their customers.

Though premiums haven’t dropped in most cases, most car insurance companies have taken to offering discounts, credit and/or refunds in hopes to keep their clients happy. This trend is said to continue for the foreseeable future.

Where Can the Market Go?

Although Covid-19 has increased the uncertainty of the car insurance industry’s market, the Deloitte Center for Financial Services has forecast a decline of 6.2% in personal car insurance premiums written in 2020, and a 3.5% decline for commercial cars. This would lead to a return of between 10 and 25% in premiums to customers, up until the number of drivers on the roads return to normalcy.

Additionally, if premium discounts continue after 2020, Deloitte estimates that personal premium volume will decrease in single digits below pre-pandemic levels until 20203. For commercial cars, if commercial decline continues, premiums will continue to be at pre-pandemic levels until 2022.

Why Luxury Vehicles and Sports Cars Cost More to Insure

Due to their higher costs and the risk they may represent, luxury vehicles and sports cars pay more in insurance premiums. Most of these cars are equipped with powerful engines able to reach high speeds in seconds. Underwriters may view these features as a potential risk. Repair costs are also taken into account — and as expected with high-end cars, they’re pricey.

It turns out that between luxury vehicles and sports cars, the owners of the latter will always pay more because they’re considered high-risk. Lots of horsepower, expensive parts, and theft rates are just some of the factors that drive up these premiums.

“For those who own sports cars and place them in our marketplace, we find that their premiums tend to be 10 to 50% higher than for similarly valued non-sports vehicles,” said Matt Sweetwood, CEO at LUXnow, a community marketplace that rents luxury cars.

New cars are also more expensive to insure because they may be equipped with the latest technology that might be costly to repair in the event of an accident.

“I think the car does have an influence on what the insurer is charging for an insurance premium,” said David Zuby, chief research officer for the Insurance Institute for Highway Safety. “Many insurers are looking very carefully at how a car's characteristics, whether that's the fitment of safety systems or other aspects of it, affect risk and then take that risk into their insurance cost calculations,” he added.

Reverse cameras and emergency automatic braking systems are just some examples of the latest tech being incorporated into new vehicles. Since these devices help prevent auto accidents, you’d expect that insuring these tech-heavy cars would cost less.

However, as mentioned above, more sophisticated and technologically advanced systems cost more to repair, and so premiums don’t really go down.

What is Telematics?

Telematics monitor a car via GPS, using smartphones or physical devices plugged into the vehicle to record speed, distance, braking, acceleration, among others. This technology is used to provide insight into a person’s driving habits behind the wheel as well as information regarding the car’s maintenance needs.

Telematics can also measure fuel efficiency, notify another party of a collision, or dispatch emergency assistance if needed.

“Car manufacturers are now building telematics into new vehicles as standard [equipment], as the [...] data becomes increasingly popular in the industry,” said Gunnar Peters, Head of Telematics for Admiral Group.

How Much Can You Save with Telematics?

Some industry analysts expect that advanced tech may eventually save drivers money. Kevin Aries, Global Product Success leader for fleet management company Verizon Connect, believes that collecting data from vehicle telematics will ultimately drive premium pricing down.

A number of car insurance companies give drivers an upfront discount on their premium just for signing up for a telematics program. If the data shows that they’re being safe drivers, the discount may increase up to 15% upon renewal of the policy.

Another use of telematics lies in pay-per-mile policies, which base premiums on vehicle usage. If you don’t drive often or have short commutes, this kind of policy could help you save on your car insurance. How much you save will depend on the kind of monitoring program you sign up for with your auto insurer.

In order to find the best car insurance companies, we vetted a total of 23 carriers.

We analyzed data such as market share, the number of complaints filed with the National Association of Insurance Commissioners (NAIC) for private passenger car insurance in 2019, and the overall ratio of those complaints compared to the industry average, which is 1.00.