Bigger isn't always better when it comes to car insurance.
When you think of car insurance, certain companies spring to mind. This is likely due to their size — and the advertising budgets that ensure they remain a constant presence on our TVs, magazines, and Internet browsers. Insurance companies such as GEICO, Progressive, Allstate, and Nationwide spend vast sums of money on such advertisements to keep themselves in the conversation. But are these major corporations always the best option for your car insurance needs?
Using a small car insurance company can have a number of benefits, including more specialized policies and — in some cases — cheaper rates. We’ll lay out some of the benefits and drawbacks of working with a small or local auto insurance company.
Some policyholders prefer the service they receive from an independent company. A smaller car insurance company may provide a more personalized experience than does a larger carrier. Because smaller insurers work with fewer customers, you may receive more individualized attention when filing claims or updating your policy. This is why many surveys that rank overall customer satisfaction tend to rule in favor of smaller companies. But how do smaller insurers compare when it comes to rates?
In some cases, yes. Erie is one of the cheapest auto insurers on average, oftentimes offering much lower rates than its larger competitors. Smaller insurance companies can sometimes offer low rates by being more selective in the customers they insure.
This isn’t always the case, however, as your insurance rates are determined by a number of factors. Drivers with a DUI- or collision-filled driving record may find cheap car insurance difficult to come by.
Below you’ll see how insurance rates for small car insurance companies stack up versus rates from one of the largest auto insurers in the United States, State Farm.
Average yearly premium
Driver age (30s)
With a speeding ticket
In most cases, you’ll be able to get the same insurance coverage options through a small car insurance company as you would a larger one. This includes liability coverage, comprehensive and collision coverage, medical payments to others, uninsured motorist coverage, and personal injury protection (PIP) where it’s required.
Regardless, even non-standard car insurance companies provide the state-mandated minimum of liability insurance. Almost every U.S. state requires drivers to carry insurance that will cover damages to others. This provides coverage in the event that you cause bodily injury or property damage to another party.
For the most part, you can acquire the same coverage from an independent insurance company. These coverage options include roadside assistance, online policy access, and other perks common to larger auto insurance providers. However, it’s always a good idea to confirm coverage options before you sign up.
Getting insurance through a small car insurance company is not the best option for everyone. Small insurance companies may not always be able to meet your specific needs. For one, smaller companies are often limited in the areas in which they provide coverage. Some companies only offer coverage in a handful of states.
Furthermore, some specialty insurance companies limit the eligibility of customers. By being selective, insurers are able to keep prices lower and provide better service to the customers they do have. This means, however, some customers won’t qualify. Good drivers with a clean driving history will usually find good coverage, but some companies have other criteria that must be met.
USAA, for instance, requires customers to be active duty United States military, veterans, or service members' family in order to qualify. California Casualty offers coverage only to educators, health care workers and select other employer groups. Amica Insurance, on the other hand, is a mid-sized company that provides auto-owners insurance in every state except Hawaii and has no explicitly-stated eligibility restrictions.
It’s also worth noting that smaller insurance companies may be less likely to adapt to changes in technology. The online presence of some regional auto insurers is still quite limited. Larger companies have been rather quick to embrace newer technologies such as telematics devices and in-car apps.
Small car insurance companies typically offer many of the same opportunities to save money as larger companies. For instance, some companies allow you can earn loyalty discounts for staying with them for a long time. What’s more as accidents and tickets fall off your record, you are likely to see your rates be positively impacted.
Below are a few other ways to keep your car insurance rates down.
While they may not have the advertising dollars of the big companies, it can be worth searching out an insurance policy with a small auto insurance company. J.D. Power rates insurance companies on a variety of different metrics, including product quality and overall customer satisfaction. These ratings can be helpful when researching different car insurance companies. A.M. Best is another great resource for finding small insurance companies that provide great service.
The bottom line is that finding the right auto insurance policy could lead you to a company that less familiar with. This doesn’t mean that they provide an inferior insurance product. On the contrary, you might be surprised at the levels of customer satisfaction that they can provide. A great place to start looking for at both large and small car insurance companies is The Zebra. We partner with auto insurance companies large and small in order to help you find the best car insurance quotes and get the coverage you need.