4 Cheap Auto Insurance Companies to Consider
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UPDATED: Apr 8, 2019
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When it comes to buying an insurance policy for your car, it’s no exaggeration to say you have plenty of choices. In fact, we are so often bombarded by ads from multiple insurance companies–all claiming to be the best and cheapest–that it can be overwhelming at times.
We’d like to help by offering you this list of four cheap auto insurance companies to consider.
If you’re ready to start shopping for a cheap auto insurance policy, there’s no quicker or easier way to do so than by entering your ZIP code into our FREE search tool!
The four insurance companies listed here are all big names with which you’re probably familiar. But this is by no means an exhaustive list. It’s always advisable for you to get half a dozen quotes from individual insurance companies or independent agents before making a decision.
The more quotes you have to compare and the more detailed those quotes are, the easier it will be for you to find the right policy.
Esurance is a San Francisco-based property and casualty company originally founded in 1998. The company’s profile at Hoover’s indicates that they were a subsidiary of White Mountains Insurance Group before Allstate purchased the company from White Mountains in 2011.
Though the California Insurance Department lists the company as offering a dozen different types of insurance products, they are most known for their automobile insurance. They are a direct-to-customer provider offering auto policies over the phone or online.
One of their selling points is an online model that ostensibly makes their insurance more efficient and less costly.
At last count, Esurance had more than 800,000 policies in force in the United States. They struggled financially during the last quarter of 2011 and the first quarter of 2012, though some speculate that trouble was part of a larger problem with Allstate.
Esurance continues to get positive reviews for both price and online presence.
In 1936, a Texas accountant and insurance specialist named Leo Goodwin Sr. decided to establish a car insurance company to provide automobile insurance to federal workers and their families. He got the idea after working several years at USAA, an insurance company specializing in offering policies to military members and their families.
Mr. Goodwin added his wife and a handful of other savvy insurance professionals to his team and established the Government Employees Insurance Company.
Today, Geico is known mostly for its creative ad campaigns featuring Martin the gecko and some highly sensitive cavemen. The company is a wholly owned subsidiary of Berkshire Hathaway, licensed to sell auto insurance policies in all 50 states.
With more than 11 million policies under their belts, Geico remains one of the largest and strongest insurance companies in America. A.M. Best gives the company an A++ rating.
The Progressive Casualty Insurance Company, known to consumers simply as “Progressive”, is one of Geico’s chief rivals when it comes to creative advertising and pop culture presence.
Most consumers are familiar with Progressive’s white and blue emergency response vehicles, as well as current advertising mascot Flo, an overzealous and quirky salesperson at the fictional Progressive shopping center.
In addition to being one of the least-expensive auto insurance companies Progressive is also one of the industry’s most innovative.
They were among the first to offer the direct-to-customer model on a large scale. They were also the first to adopt a policy of offering consumers side-by-side quotes between their products and those of their competitors.
Other firsts for Progressive include their response vehicle fleet, their online purchase options, and the idea of pay-as-you-drive auto insurance.
21st Century Insurance
As far as car insurance goes, 21st Century is one of the youngest of the big names, having been established in 1958. When Louis Foster started the company, his original idea was to make it an insurance exchange rather than a straight-up property and casualty provider.
What began as a small California company expanded to include licenses in 48 states. AIG purchased the company in 2005, only to turn around and sell it to the Farmers Insurance Group in 2009.
In order to keep 21st Century viable following the collapse of AIG, Farmers left most of the policies intact and continued conducting business the same way AIG did. The idea was to make sure current policyholders were as comfortable as possible with the company’s new owner.
Despite some initial financial difficulties, Reuters reported on June 28, 2012 that Standard & Poor’s upgraded the ratings for both 21st Century and Farmers to A+.
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What to Look for in Car Insurance
Now that you have a list of companies to consider, it’s important to know for what it is you should be looking.
Remember that price alone should not determine who you buy your auto insurance from.
You have to take into account how much coverage you’re getting for your dollar, what your deductibles are, and how a company is rated for both customer service and claims. A good resource for overall insurance ratings is market research company J.D. Power and Associates.
J.D. Power’s ratings are based on several different factors, including policy offerings, customer service, payment options, pricing, and more. They use a five-point rating system based on intense public opinion research. Their ratings are considered within the industry to be some of the most reliable.
Nuts and Bolts of Your Policy
As for your insurance policy itself, it’s important to note the “nuts and bolts” in order to know that you’re really getting a good deal. That starts with the basic liability coverage required by your state.
If you need to know the minimum requirements where you live you can check with your state insurance department or department of motor vehicles.
State minimums are normally represented in a three-number formula similar to 25/50/10. These three numbers represent differing amounts of liability and property damage coverage in tens of thousands of dollars.
For each policy quote you look at you should pay attention to whether liability insurance is at the minimum level or has been increased by the insurance company.
Next you’ll need to be concerned about collision and comprehensive coverage. These two types of insurance are what you need to replace or repair your car when it’s damaged.
Most collision and comprehensive policies are based on the current established value of your car; this means you’re unlikely to get better collision and comprehensive by switching to a different policy. This is one area where price plays an important role.
Finally, you need to take a look at the deductibles for all the policies you’re considering. A deductible is the amount of money you agree to pay towards any car insurance claims. If a given policy has a $500 deductible, for example, you would be agreeing to pay the first $500 on a $1,500 insurance claim. Your carrier would pick up the remaining $1,000.
One of the ways to reduce the cost of your insurance is to increase your deductible amounts. But that only works if you are a safe driver who files very few insurance claims.
If you’re someone who has accidents on a regular basis, the cost of your deductibles could well exceed the difference between your cheap policy and one that’s slightly more expensive with lower deductibles.
Keeping Your Price Low
Once you find a cheap auto insurance policy that you like you need to do a couple of things to keep the price as low as possible. Keep in mind that how you drive will play a role in what your premiums are in the future.
Poor driving resulting in tickets for violations will only drive your prices up. Conversely, driving safely and staying out of trouble will prevent unnecessary rate increases.
One area to be especially careful of is speeding tickets.
Every time you get a speeding ticket it is entered into a computerized database to which your insurance company most likely has access.
Speeding tickets also add points to your license and blemishes to your driving record for a specific amount of time. Your insurance company, because they conduct periodic reviews of your driving history, will eventually find out about your speeding tickets and raise your rates.
Other things virtually guaranteed to cause premium hikes include DUI/DWI convictions, convictions for leaving the scene of an accident, license suspensions or registrations, policy lapses for lack of payment, and accidents resulting from your own carelessness.
Periodic Review of Your Auto Insurance
Even if you find the cheapest auto policy and you stay out of trouble behind the wheel, there’s never a guarantee that your current provider will remain the cheapest in the future. Car insurance is an evolving industry with evolving prices.
That’s why it’s a good idea to periodically review your coverage and compare it against new quotes. Every one or two years should be sufficient to make sure you’re always getting the best price.
If you’ve been putting off searching for auto insurance quotes, there is no need to continue doing so; just enter your ZIP code into our FREE search tool and you’ll have quotes at your fingertips in no time!