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Car insurance is essential to protect people from devastating financial loss in the event of an accident. To get the right protection at an affordable price, it's important to shop for the best car insurance company. Find our picks of the best auto insurers below, along with essential education to help pick the right amount of coverage.
The Ascent's best car insurance companies for 2021
- State Farm: Best for bundling coverage and for young drivers
- Auto-Owners Insurance: Best for bundling policies
- Geico: Best for affordable premiums
- Farm Bureau Insurance: Best for claims handling
- USAA: Best for current and former military members
State Farm
Best for: Bundling coverage and for young driversState Farm
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Bottom Line
State Farm offers multiple opportunities for discounts, including for bundling coverage. But the best savings comes from the different programs it offers for young drivers including Steer Clear as well as a good student discount. With comprehensive coverage options and low premiums, parents and teens can rest assured they're protected in case of an accident.
Pros
- Young adult drivers can save up to 15% on coverage
- Discounts for good grades can provide another 25% savings for young drivers
- High customer satisfaction rankings
- Nationwide agent network
- Access to array of insurances under one roof
Cons
- A low credit score can increase premiums
- Agent quality within its network can be inconsistent
Stand-out coverage options
- Steer Clear program offers discounts for policyholders under the age of 25
- Optional car rental and travel expense coverage pays not just for a rental vehicle but also travel expenses to the driver's home or destination if an accident happens 50 or more miles home
- Rideshare insurance is available
Auto-Owners Insurance
Best for: Bundling policiesAuto-Owners Insurance
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Bottom Line
Auto-Owners insurance offers more coverage than its name implies, but it does shine for its auto coverage, among other policy types including homeowners or renters insurance, life insurance, and business insurance. People can buy all the insurance they need from one company while earning generous premium discounts for bundled coverage. Additional discounts for those who pay in full annually or who make at least 36 months of on-time premium payments can provide even more savings for the budget-conscious buyer.
Pros
- Bundled coverage discounts
- High customer satisfaction
- Roadside assistance coverage available in the U.S. and Canada
Cons
- Policies are only available in 26 states
- Policy must be purchased through an independent agent
Stand-out coverage options
- Gap insurance to pay off a remaining loan or lease balance if the car is totaled
- Additional expense coverage, which pays for rental cars, food, lodging, and other incidental expenses in case of an accident far from home
- Personal Automobile Plus package which groups 10 popular additional coverage options including cellphone replacement, lock rekeying, and more
Geico
Best for: Affordable premiumsGeico
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Bottom Line
Geico is one of the most affordable insurers available, and it offers comprehensive auto insurance coverage options at premiums that beat out most competitors. Geico promises to save people 15% or more on car insurance, and assessments of policy premiums shows it lives up to its promise. Insurance is available in all 50 states, and there are additional discounts for military members, good students, federal employees, seniors, and others who belong to certain groups or organizations.
Pros
- Nationwide coverage
- Affordable premiums
- High customer satisfaction
- Efficient claims handling process
- Great online application and account management experience
Cons
- Limited insurance coverage beyond auto insurance
- Fewer local agents than competitors
Stand-out coverage options
- Mechanical Breakdown Insurance, which provides coverage for repairs and is available for new or leased vehicles that are less than 15 months old and have less than 15,000 miles
- Auto Repair Xpress® program can get motorists back on the road faster after an accident as they'll get priority repairs and streamlined claims processing
- Rideshare insurance is available
Farm Bureau Insurance
Best for: Claims handlingFarm Bureau Insurance
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Bottom Line
With a claims satisfaction rate of more than 90%, Farm Bureau has proven it'll be there if something goes wrong. Farm Bureau also shines with affordable premiums and multiple ways to save, including by signing up for Driveology and earning reduced premiums by letting the insurer collect data about the motorist's driving habits. With top-notch claims handling service and replacement cost coverage for newer vehicles, policyholders have the confidence of knowing their claims will be handled swiftly and efficiently with minimal out-of-pocket losses if a crash occurs.
Pros
- One of the highest claims satisfaction rates of any insurer
- High overall customer satisfaction
- Offers an array of discounts (multi-driver and savings for good students)
Cons
- Policyholders need to be a member of the bureau in their state
- Farm Bureau insurance is not available in all states
Stand-out coverage options
- Replacement cost coverage, which is available when a vehicle is either four or five model years old or newer (depending on the state)
USAA
Best for: Current and former military membersUSAA
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Bottom line
USAA offers military members and their families some of the best auto insurance coverage available. Premiums are lower than most competitors, there are plentiful coverage options, and many opportunities to save further with premium discounts. Free accident forgiveness coverage after five years also means premiums won't go up if a crash happens. USAA is open only to military members, veterans, and their families. For those who qualify, it's likely their best bet for car insurance.
Pros
- Premiums are cheaper than with most competitors
- High customer satisfaction ratings
- Policy discounts (for good students, for housing a car on a military base, and more)
Cons
- No coverage available outside of current and former military members, and their families
Stand-out coverage options:
- Free accident forgiveness after five years
- Rideshare insurance is available
What is car insurance?
Car insurance is a type of insurance policy that protects against financial loss. Auto insurance pays the bills if the policyholder causes an accident. Depending what kind of coverage a person buys, it also helps pay for repairs or replacement of their own vehicle.
Here are some of the costs car insurance can cover:
- Repairing or replacing the vehicle after a fire, theft, or other disaster
- Medical bills if the driver is hurt in an accident
- Lost wages if injuries from an accident stop the driver from working
- Losses another motorist causes if they are uninsured or underinsured
- Damage to other people's property the policyholder causes with their vehicle
- Injuries others experience if the policyholder causes a crash
- Rental car expenses if the vehicle is in the shop for repairs
- Emergency roadside assistance
Motorists don't have to buy all of these kinds of insurance coverage. But they should buy the best car insurance coverage to protect against losses they can't afford to pay for out of pocket.
How much car insurance do you need?
Drivers may not always want to look for the cheapest car insurance when selecting a policy. But many people want enough coverage to ensure an accident doesn't cost thousands of dollars, which may require paying a higher monthly premium.
The amount of insurance coverage a person needs depends on their situation. However, most states have certain minimum requirements. States may require a driver to buy:
- Liability insurance
- Uninsured/underinsured motorist coverage. This pays for losses another driver should cover if the other motorist doesn't have enough insurance
- Personal injury protection, or PIP. This pays for medical bills and lost wages in cases of minor accidents
In California, for example, a motorist must have:
- $15,000 in injury liability coverage per person
- $30,000 in injury liability coverage per accident
- $5,000 in property damage liability coverage
California doesn't require people to buy PIP. However, 15 states do. These are called "no-fault" states. People who live in no-fault states must use their own insurance to pay for losses after minor accidents. That's true even if another driver were to blame.
New York is an example of a no-fault state. It requires drivers to buy at least $50,000 in PIP coverage. There are also three "choice" no-fault states. There, motorists can opt to buy PIP coverage or choose a different policy often called a "full-tort" policy. A full-tort policy always allows someone to sue other drivers, even after minor collisions.
Many people may want to buy more than the minimum required insurance if they want the best car insurance.
If drivers don't and they cause an accident, they could be held personally liable. If a motorist gets into a collision and causes a death, they could be sued for millions of dollars. Having just $15,000 in coverage would do little to protect their assets.
Some people may also want insurance coverage to protect them if their own vehicle is stolen or damaged. Remember, liability insurance won't cover anything that happens to the policyholder's own car, even with the best policy. A driver could buy collision insurance to repair or replace their vehicle in the event of a crash. And they could get comprehensive coverage to pay for other losses.
With the best car insurance companies, drivers also have other coverage options. For example, they could choose new car replacement coverage. This ensures a motorist gets a brand-new vehicle after an accident in a new car. Otherwise, they'd receive the current market value. This is important since new cars lose value so quickly.
Remember, the more insurance someone buys, the more protection they have from loss -- but the higher the premiums. The best car insurance provides a good balance between affordability and coverage.
What does comprehensive auto insurance cover?
When shopping for the best car insurance, some drivers may wish to include comprehensive auto insurance.
Comprehensive auto insurance is also called "other than collision" coverage. It pays for damage to a car that doesn't happen as a result of a crash with another motorist. It's optional, not required. It pays for losses resulting from:
- Windshield or glass damage
- Accidents with animals
- Fire damage
- Theft
- Vandalism
- Acts of nature
When shopping around for the best car insurance, people can often get comprehensive coverage very affordably. Buying it could save a lot of money if something goes wrong.
What does liability auto insurance cover?
Finding the right liability insurance is key to getting the best car insurance. This type of insurance is generally required. It can also protect drivers from large financial losses.
Auto liability insurance pays out when the policyholder damages someone else. If they crash their vehicle into someone's property, it will pay to repair it. If they hurt or kill someone, it will also pay for legal fees to defend a lawsuit as well as a settlement or court damages. It only pays up to policy limits, though.
It's not a good idea to skimp on auto liability insurance. That's because the policyholder is personally liable for damages above what their insurance covers. Drivers should be sure to buy enough coverage to protect their assets. By shopping around and getting several insurance quotes, motorists can find the best car insurance at an affordable price that provides the coverage they need. Car insurance is important, so it's worth the effort.
A recap of the best car insurance companies
| Provider | Best for | Next steps |
|---|---|---|
| State Farm | Bundling coverage and for young drivers | Get a Quote |
| Auto-Owners Insurance | Bundling policies | Get a Quote |
| Geico | Affordable premiums | Get a Quote |
| Farm Bureau Insurance | Claims handling | Get a Quote |
| USAA | Current and former military members | Get a Quote |
About the Author
Christy Bieber is a full-time personal finance and legal writer with more than a decade of experience. She has a JD from UCLA as well as a degree in English, Media and Communications with a Certificate in Business Management from the University of Rochester. In addition to writing for The Ascent and The Motley Fool, her work has also been featured regularly on MSN Money, CNBC, and USA Today. She also ghost writes textbooks, serves as a subject matter expert for online course design, and is a former college instructor.
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