Best Car Insurance Companies of 2021

For the majority of Americans, car insurance is a necessity. Without it, we would be exposed to the financial risks of collision, theft, or liability in the event of an at-fault accident. As a must-have, however, car insurance can be expensive and rates are expected to continue increasing in the near future.

At its core, car insurance is an investment of sorts — a safeguard against unwanted expenses. As a responsible driver, you’re likely interested in getting the right type and level of protection for yourself and your vehicle. At the same time, you might also be looking for the best way to save on premiums without compromising on coverage.

With car insurance, it's usually standard procedure across the Internet to recommend the most affordable option. And yet, there is an argument to be made that paying more upfront can save a lot of time and money if the insurer is more likely to properly support you during a potential claim.

That said, in these difficult financial times, it's all about balancing needs with expenses. That's why we decided to prioritize — based on research — those companies that offered the most inexpensive rates while not sacrificing coverage, efficient claims processing, and customer service.

New Technologies Save Lives but Not That Much Money

From reverse cameras to emergency automatic braking systems, the latest tech is being incorporated into new vehicles. Since these devices help prevent auto accidents, you’d expect that the cost of insuring cars that have them would decline. That makes sense — but there’s a catch. More sophisticated and technologically-advanced systems cost more to repair.

What Is Telematics?

Telematics is a way of monitoring a vehicle with 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 driver’s behavior behind the wheel as well as information regarding the car’s need for maintenance. Telematics can also measure fuel efficiency, notify another party of a collision, or dispatch emergency assistance if needed.

How Much Can You Save?

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 prices down. “The more advanced way is really around how car insurance companies are collecting that data [...] so they can better optimize how they're pricing their services,” he said.

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 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.

Privacy Concerns

Some experts believe drivers will be more careful if they know they’re being monitored, thereby reducing their risk of being in an accident. Martin McRandal, former underwriter and telematics manager, believes that monitoring drivers and measuring their behavior behind the wheel will have positive results. “There’s a placebo effect, if you like,” he said. “What gets measured gets improved.”

With all the data that telematics collects, some concerns have been raised about privacy and who has access to that information. Since telematics tracks a vehicle’s movement, it could also provide insight into individual consumer behavior, like where a person shops and what restaurants they prefer. It’s the kind of big data advertisers would like to have. But while collecting data on shopping and restaurant choices may seem innocuous to some, there are a number of other situations where driving and location data could be used for more disadvantageous purposes.

McRandal thinks allowing telematics to monitor your driving is akin to forgoing your privacy in order to use social media. “There's obviously a data protection issue,” he says. “But if you're giving people a cheaper premium, in return for them allowing you to use their data for whatever purposes, I think it works,” he added.

The Future Of Telematics

The technology behind telematics has evolved considerably in recent years, and shows no signs of slowing down. Some studies indicate that by the year 2030, 146 million connected vehicles will be operating in the United States. All those vehicles will be producing a wealth of data that will bring forth many new developments and, according to the U.S. Department of Transportation, will save lives.

For his part, Kevin Aries believes there will come a time when most or perhaps all auto insurers will take advantage of this technology. “There's an advantage to both the company and the consumer,” he said. “By leveraging data and a better understanding of the risk profiles associated with their customers, companies can provide accurately-priced products. On the customer end of things, safe drivers are rewarded with lower-cost insurance.”

Bundle Insurance Policies

You can bundle-policies under one company to save an average of 8% on your combined premiums, depending on the company. 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 car 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.

Prices are a result of supply and demand. The current economic situation with COVID-19 is forcing demand to slow down. [Auto insurance] prices might react, and either level or go down.

Patricia Pérez President of
American Insurance Brokers

Auto insurance premiums will continue to rise. Some policyholders don’t mind paying high prices because of what a car represents in terms of appearance. Perhaps other types of insurance premiums might fluctuate, but auto will continue to go up bit by bit.

Frank Rosado Insurance Agent

Recent world technology and data are becoming integral parts of any business — including insurance. Car manufacturers are now building telematics into new vehicles as standard [equipment], as the [...] data becomes increasingly popular in the industry.

Gunnar Peters Head of Telematics for
Admiral Group

Important Things to Know

Auto insurance is a form of financial protection, for you and your vehicle, against theft, collisions, and/or liability. It is 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.

In the United States, there are over 220 million drivers, the majority of which need to be insured by law. 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, whether you own a home, among others.

With so many options and influencing factors, getting quotes and purchasing an insurance policy online can be overwhelming. “I would say people should be a bit more educated about what they're buying,” said Pérez. “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. 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.

Factors that Drive 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 will run up your payments for three years, sometimes longer.

Also, there are 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 driving record clear of any 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.

Car usage

If you don’t drive often, there are fewer chances you’ll be involved in an accident. The opposite is also true.

Place of residence

Where you live is a big factor, especially the vehicle theft rates in your area.

Age

Inexperienced drivers below the age of 25 usually pay higher premiums.

Gender

Statistically speaking, women are involved in fewer car accidents than men.

Credit score

Your score may be viewed as a reflection of your responsibility or lack thereof.

Source: Insurance Information Institute

Why Luxury Vehicles and Sports Cars Cost More to Insure

Due to their high-end costs and the risk they may represent, luxury vehicles and sports cars pay higher 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. Also, repair costs are 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 of 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 will 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.

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

This process consisted of analyzing 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.