What is Car Insurance? - Car insurance is a contract between you and the insurance company that provides you with specific coverage in exchange for your premium payments. Your car insurance policy is the contract that outlines what you can make claims for.

The best car insurance policies cover your liability (meaning damage and injuries you cause to others), damage to your own vehicle, and car accident injuries to you and your passengers.

If you fail to pay your car insurance bill, coverage lapses and any claims you make can be denied.

Forbes taken guesswork out of finding the best car insurance companies by analyzing important factors that will affect your customer experience.

Forbes evaluated large auto insurance companies based on average rates for a variety of drivers, coverage features available, levels of complaints, grades for collision claims from auto body repair professionals and how understandable the insurers’ websites are. See the summary of the Best Car Insurance Company Ratings 2023.

1. Geico
2. Nationwide
3. Travelers
4. USAA
5. Auto-Owners Insurance
6. State Farm
7. Allstate
8. Erie Insurance
9. Progressive
10. Farmers

How Much Does Car Insurance Cost?

Car insurance shoppers often put the most importance on price. Here are average annual and monthly costs for good drivers.

COMPANY 1. USAA 2. Geico 3. State Farm 4. Erie 5. Travelers 6. Auto-Owners 7. Nationwide 8. Progressive 9. Allstate 10. Farmers

AVERAGE ANNUAL $1,141  $1,182  $1,402  $1,419  $1,435  $1,532  $1,540  $1,892  $2,022  $2,124

AVERAGE MONTHLY $95  $99  $117  $118  $120  $128  $128  $158  $169  $177

Why Do People Shop for New Car Insurance?

Shopping around for car insurance can result in savings, but many car owners renew their policies each year without checking prices from other insurance companies.

A March 2022 Forbes Advisor survey of 2,000 drivers asked what would motivate them to shop for a new car insurance policy. More than half said any of these three reasons would get them to shop around:

A bad experience with a car insurance claim (55%)
Looking for a better price (54%)
Current company doesn’t have the coverage types I want (52%)
Older drivers (ages 58 to 76) chose price as the No. 1 reason to shop around, while bad claims experiences and coverage types were tops for younger drivers (ages 18 to 25).

Factors That Impact the Cost of Car Insurance
Your car insurance cost will vary depending on several factors that typically include:

Your driving record
Your age and years of driving experience
Where you live
Car insurance coverage selections
Deductible amount (if you buy collision and comprehensive coverage)
Vehicle model
Your car insurance history, such as whether you’ve had continuous coverage or lapses
Your credit-based insurance score (use of credit in calculating car insurance costs is banned in California, Hawaii, Massachusetts and Michigan)

How Can I Find the Best Price on Car Insurance?
Once you decide how much car insurance you need, it’s time to start shopping for a policy. Rates often vary widely among companies for the exact same coverage, so it’s smart to compare car insurance quotes from multiple insurers. For example, in California, rates for a good driver range from $1,668 (Wawanesa) to $3,940 (The Hartford)—a range of about $2,270 for the exact same driver.

Here’s what you should do to find the cheapest car insurance.

1. Shop around
If you don’t shop around, you won’t know if your rates are on the high end or the cheapest. Getting multiple quotes will help you find the most affordable car insurance company. You can find free quotes online or by working with an auto insurance agent. Independent insurance agents can provide quotes from multiple companies. Insurance quotes are always free.

2. Ask about discounts
Ask about car insurance discounts when you’re getting car insurance quotes. You can typically knock down your car insurance costs with discounts for:

By “bundling” multiple insurance policies from the same company, such as auto and home insurance.

Insuring more than one vehicle with the same company.
Qualifying for a good driver discount.
If you have a student on the policy, getting a discount if they’re a good student.
If you have a college student on the policy, snagging a discount if they’re away at school without a car (usually must be at least 100 miles away).
Taking a defensive driving class if you are age 55 or older.
Paying your car insurance bill in full for the term rather than monthly.

3. Choose a higher deductible
Collision and comprehensive coverage have a deductible. The deductible is the amount of money a car insurance company deducts from an insurance claims check.

The higher your deductible, the less you’ll pay for insurance.

Here’s an example. Let’s say you get into an accident and your car suffers $2,000 worth of damage. If your collision deductible is $500, the insurer will deduct that from the settlement amount, so you’d get a $1,500 check to cover the repairs.

If you decide on a high deductible, try to set aside money for that deductible, so you have it available if you need to file a claim later.

4. Ask about pay-per-mile policy if you don’t drive much
If you own a car but take public transportation to work and don’t drive your vehicle much, check out pay-per-mile auto insurance policies.

These policies charge a monthly base rate and also a per-mile rate. They can be a more affordable option if you don’t spend much time behind the wheel.

Let’s say your pay-per-mile insurance has a base rate of $40 a month and a 5-cent per mile rate. If you drive 500 miles in a month, your monthly bill would be $65 ($40 plus 500 miles times $.05).

5. Ask about usage-based car insurance
Usage-based insurance (UBI), also called telematics, may sound like pay-per-mile, but it’s quite different. With a usage-based insurance policy, the car insurance company tracks your driving closely and creates a driving score.

For instance, a usage-based insurance program might track your speed, braking, acceleration, miles driven and time of day. The program will use a smartphone app or a device attached to the vehicle to track your driving.

These programs often come with an initial discount and then you may save more based on your driving. But not all drivers with UBI can save money. These programs are best suited for excellent drivers.

Other Types of Auto Insurance to Consider

Sometimes getting the best car insurance means adding extra coverage in order to get more protection or guard against unexpected out-of-pocket expenses. Here are some other auto insurance types to consider.

Accident forgiveness. Raising your car insurance rates after you cause an accident is standard operating procedure for car insurance companies. If you get “accident forgiveness” coverage from your insurer, you can escape a rate increase after your first at-fault accident. Some insurers go a step further and also “forgive” a moving violation, such as a speeding ticket.

Gap insurance. Do you have a large car loan balance or lease? If your car is totaled, the insurance payout for the vehicle could be much less than your balance. Gap insurance pays the difference.

New car replacement. If you’re the unlikely driver who totals your new car, this coverage can help. It will pay to replace your car with a similar new car, rather than compensating you only for the depreciated value of your car. New car replacement coverage rules can vary among insurers for what qualifies as a “new” car so check the details.

Pay-per-mile insurance. If you drive very little, pay-per-mile auto insurance could be a good bet for you. Part of your premium hinges on exactly how many miles you drive each month. The other part, called the base rate, doesn’t change from month to month.

SR-22 insurance. An SR-22 is definitely not something you want, but you may need an insurer that provides it. Your state could require you to obtain an SR-22 form to prove that you have auto insurance. Your insurance company needs to send this form to the state to verify you have coverage, but not all insurers perform this service. You might end up with an SR-22 requirement if, for example, you rack up a lot of moving violations or you cause an accident while driving uninsured.

Usage-based insurance. This type of policy has the potential to reduce your car insurance bill if you’re a really good driver. This typically means no speeding, hard braking, hard cornering and other factors. Usage-based insurance (UBI) programs use either an app or a device that plugs into your car to track your driving habits.

But don’t count on savings from usage-based insurance. Less than half (48%) of drivers who opt into a usage-based insurance program actually see savings, according to TransUnion’s 2022 Insurance Trends and Outlook Report. Premiums stayed the same for 30% of drivers using UBI.

Vanishing deductibles. If you have a collision or comprehensive insurance claim, your insurance check will be reduced by your deductible. Some auto insurers take the sting out of deductibles by offering a vanishing deductible. Generally this means a set reduction (such as $100) for every year you don’t make a claim.

The Insiders’ View of Car Insurance Claims

If you’re lucky, you’ll have very little experience with collision repairs. That also means you won’t necessarily know if you’re getting superior claims service compared to other insurers.

Collision repair professionals have the advantage of dealing with insurers daily and seeing which companies try to cut corners on claims, and which companies have processes that slow down the repair process.

For this reason we incorporated grades of insurance companies from collision repair professionals, supplied by CRASH Network.

“Drivers pay their auto insurance premiums every month, yet they only find out how well that insurer will take care of them when they file a claim—which happens about once a decade for the average driver,” says John Yoswick, editor of CRASH Network, which has a weekly newsletter covering the collision repair and auto insurance market segments.

“But auto body repair shops see every day which insurance companies prioritize cost-savings by pushing to use the cheapest parts and repair methods, and which insurers take better care of their policyholders by prioritizing repair quality and the use of automaker-recommended repair methods and parts,” he says.

CRASH Network produces an annual Insurer Report Card that gives insight into insurers’ claims processes that others don’t see. Auto body repair professionals across the country are asked, “How well does this company’s claims handling policies, attitude and payment practices ensure quality repairs and customer service for motorists?”

“This knowledge gives body shops a unique perspective on which insurance companies consistently earn an ‘A’ when it comes to customer service and a proper repair for their policyholders, and which insurers deserve a ‘C’ or ‘D,’” says Yoswick.

Among 75 insurers scored by CRASH Network, only North Carolina Farm Bureau, Chubb, Erie and Michigan Farm Bureau received grades in the “A” range.

States With the Most Confrontational Drivers

Utah has the most confrontational drivers, according to a Forbes Advisor survey of 5,000 drivers.

Utah has the highest percentage of drivers reporting being honked at in frustration (76%). Beehive State drivers were second most likely to report another driver had tailgated their cars (73%). And more than half of surveyed Utah drivers (58%) said they experienced other drivers in their home state making rude or offensive gestures at them while driving.

Missouri came in second for the most confrontational drivers. The most frequently reported confrontational incidents included being on the receiving end of offensive gestures (54%) and being cut off by another driver on purpose (54%).

Half of Missouri drivers said they had another driver yell, insult or curse at them while driving. Missourians also had the highest rate of drivers who said another driver pointed a gun or shot at them (8%).

Overall, 85% of drivers reported they’d experienced at least one type of road rage. Some actions may seem harmless, like honking, but others may have serious consequences. Almost a quarter (22%) of surveyed drivers saw an accident instigated by confrontational driving.

If you cause a car accident, expect your auto insurance rates to go up. After an accident with injuries, the average rate increase nationally is 47% rate. Accidents that cause property damage increase rates by 45% on average. Accident is a key word here, as auto accidents are covered by car insurance while intentional acts are not.

Use of Mobile Apps in Auto Insurance Claims

The last couple of years have pushed car insurance companies to streamline auto accident claims through more easily accessible means, such as mobile apps.

Tech-savvy drivers seem happy to engage with insurance companies and repair facilities via mobile apps in order to speed up their claims, but what about injury claims? CCC Information Services, a provider of data and technologies to the automotive industry, surveyed more than 500 drivers who had a minor injury from a low-impact auto accident within the last two years. CCC found that 91% of respondents used a mobile app during their auto insurance claims process. More than half of respondents (55%) used a car insurance app for the first time after their accidents.

Nearly three-quarters (72%) of the drivers had a positive impression of the claims process. A majority of respondents, 89%, said that they both would use a mobile app to submit claims and select an insurance company that offers an accelerated mobile payment option if these items would speed up the claims process.

While most injured drivers surveyed used a mobile app during some part of their claims process, only 37% submitted their injury claim using their auto insurance company’s mobile app.

If you’re injured in an accident, consider using your insurer’s mobile app to keep informed about your claim’s status and speed along the process.

Here are the mobile app features survey respondents used for their claims:

1. Took pictures of car damage (50%)
2. Contacted insurance company (46%)
3. Filed a claim (43%)
4. Researched what my policy covers (38%)
5. Reviewed my policy benefits (36%)
6. Scheduled an appointment at a repair shop (33%)
7. Updated personal contact information (31%)
8. Contacted the nearest repair shop (27%)
9. Initiated text or chat with an insurance representative (26%)
10. Found the nearest repair shop (26%)
11. Exchanged information with the other driver (23%)
12. Contacted a towing truck (20%)

Ratings Methodology
To identify the best car insurance companies we took a holistic view of each company that incorporates scores for auto insurance rates, the coverage options offered, complaints against the company, collision repair and how easy it is to understand the information on their websites.

Auto insurance rates: 50% of score. We used data from Quadrant Information Services to find average rates from each company for good drivers, drivers who have caused an accident, drivers with a speeding ticket, drivers with a DUI, drivers with poor credit, drivers caught without insurance, adding a teen driver, senior drivers and young drivers.

Car insurance coverage options: 25% of score. Any auto insurance company can provide the basics of liability insurance, collision and comprehensive coverage and other standard offerings. But it’s also important to have access to additional coverage types that can provide greater protection or cost savings. In this category we gave points to companies that offer accident forgiveness, new car replacement, vanishing deductibles, usage-based or pay-per-mile insurance, and SR-22s.

Complaints (20% of score): We used complaint data from the National Association of Insurance Commissioners. Each state’s department of insurance is in charge of logging and monitoring complaints against the companies that operate in their states. Most auto insurance complaints center on claims, including unsatisfactory settlements, delays and denials.

Collision repair (5% of score): Auto body shop professionals have an insider view of each company’s approach to repairs. The better insurers don’t apply pressure to cut costs or install lower-quality repair parts. Some insurers also have processes that help speed up repair and claims processes, making for more happy customers. We used data provided by CRASH Network, a weekly newsletter covering the collision repair and auto insurance market segments. CRASH Network’s 2021 Insurer Report Card used grades from more than 1,000 collision repair professionals to gauge auto insurers on the quality of their collision claims service.

Website readability: Bonus points. It’s important to understand the coverage you’re buying, and insurance company websites should help you do that. But many insurer websites don’t do a good job explaining the products they sell. Many insurer sites are filled with passive voice, jargon, complex words and long sentences..

Forbes Advisor asked VisibleThread to analyze the readability of insurance company websites. Visible Thread is a language analysis platform that improves the efficiency, clarity and compliance of mission-critical business writing. Read VisibleThread’s Forbes Advisor Research Report.

Source: Forbes