Comparison of the Top Online Auto Insurance Companies
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UPDATED: Mar 12, 2019
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If you’re in your late teens or early 20s, you don’t remember a world without the Internet. Yet the introduction of the Internet as the primary means of global communication has changed the way we do just about everything, including purchasing auto insurance.
And since Internet-based insurance is becoming more popular, we thought it only right to compare the top online auto insurance companies in order to help you make your purchasing decision.
If finding affordable auto insurance is on your list of things to do today, you can get it out of the way right now by entering your ZIP code into our FREE search tool on this page!
As you make your way through this comparison, keep in mind that it’s impossible for us to declare one car insurance company the best among all of them.
Insurance is a very personal thing among drivers because we all have different needs and face different circumstances.
The best insurance company for you will be the one that offers you the coverage you need at a price you can afford, and backs it up with a customer and claims service you’re satisfied with.
A Brief History of Auto Insurance
The very first auto insurance policy in the United States was issued in 1898 by the Travelers Insurance Company. It was a modified version of a policy originally written for a carriage drawn by multiple horses.
With so few cars on the road at that time, the policy was deemed adequate. That all changed within just a couple of decades.
According to research from the RAND Corporation the first compulsory financial responsibility law was passed by the state of Connecticut in 1925. However, car owners could fulfill that law without actually purchasing insurance.
They were only required to prove after an accident that they had the financial means to pay for it. They were free to do so in any way they saw fit.
The state of Massachusetts led the way in compulsory insurance laws by implementing its regulations in 1927.
Massachusetts was also the first state to implement a no-fault model for auto insurance in the 1970s.
Moving Auto Insurance Online
As more states began mandating auto insurance, it was added to the portfolio of products offered by local, independent insurance agents. Through the 1970s and into the 1980s, purchasing insurance directly from a carrier was mostly unheard of. Instead, people used independent agents who would compare policies and try to offer them the best deal possible.
By the late 1980s, however, the tide began to change, thanks to Progressive Casualty Insurance Company.
Progressive was the first major insurance company to offer automobile policies directly to customers without having to go through an independent agent. You could simply call them on the phone, speak directly with a customer service representative, and purchase your policy. They were also the first to offer policies from their website.
Now that you know a little about auto insurance and where it came from, let’s get to our comparison. Please bear in mind that we are not endorsing any online auto insurance company over another.
We start with Esurance because they were the first auto insurance company built exclusively around an online model. The company was established in 1999 to offer auto insurance policies direct to customers, preferably over the Internet.
The company did staff a telephone operations center to aid customers who were having trouble purchasing online or who just preferred to speak to a representative.
Today, the company is a subsidiary of Allstate. They currently have about 850,000 policies in 30 states. As for the remaining 20 states where they are not licensed to sell auto insurance, their website provides an insurance search tool to help drivers locate policies.
In all likelihood, the search concentrates on policies from Allstate and a handful of other companies that Esurance partners with, including Safeco and Progressive.
According to a June 2012 report by the Chicago Tribune, Esurance has not been doing well financially since the Allstate acquisition. The company lost $61 million in the first quarter of 2012, after losing $44 million in the previous quarter. Some analysts question whether or not the company can continue to move forward under Allstate leadership.
On the positive side, Esurance was given a “5″ rating by J.D. Power and Associates for the quality of their website, as the result of their most recent customer surveys.
The company scored a “3″ rating for price and product offerings.
Progressive is an Ohio-based company that traces its roots back to 1937. Today, the company offers auto insurance around the country, as well as several different lines of property and casualty products. According to CNN Money, Progressive was ranked 169 on the 2012 Fortune 500 list with more than $15 billion in revenues.
Progressive has been a pioneer in auto insurance for decades. They were the first to introduce direct-to-customer sales that bypassed the independent agent. There were also first to utilize a fleet of local, rapid-response vehicles based out of claims offices scattered throughout the country.
Today, their white SUVs with blue lettering are among the most recognized fleets to American consumers.
J.D. Power and Associates gives Progressive high marks for both their website and their call center. On the other hand, their ratings are lower in terms of product offerings and price.
As for low ratings for local agents, customer dissatisfaction may be tied to a misunderstanding of how Progressive does business.
Those who work locally are not sales or customer service agents; they are simply there to handle claims.
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The General Automobile Insurance Services, also known simply as “The General,” is a Tennessee-based company that has been offering auto insurance policies since 1963. The majority of their business is done online.
According to their website, they write about 5% of all online auto insurance policies issued in the United States. That’s fairly significant given the fact that The General is only licensed to sell policies in some states.
The General prides itself in meeting customer needs in ways that other insurance companies don’t. For example, they claim to be more willing to take on drivers with troubled histories that might include multiple accidents, multiple tickets, and insurance lapses.
They also offer policies with low down payments and very affordable monthly payment plans.
Financial services ratings company A.M. Best gives The General a rating of A- (“Excellent”) for both their current financial stability and their long-term outlook. They didn’t crack the top 24 for the 2012 J.D. Power and Associates Insurance Shopping Study.
Nationwide Mutual Insurance Company is an Ohio insurance company founded in 1926. They are much more than auto insurance, however. They are involved in banking and high-profile investing around the world.
They’re also heavily involved in pro sports, and are a major sponsor of NASCAR, PGA Golf, Major League Baseball, the National Hockey League, and the National Football League.
In terms of their online insurance offerings, J.D. Power and Associates ranks Nationwide among the best in terms of their website.
They are right up there with Progressive and Esurance in this department. They also get great marks for policy offerings, call center response, and local agent availability.
Their local agents could be the one factor that sets them apart from some of their other online competitors. This hybrid model of selling direct-to-customer and through agents seems to satisfy the needs of customers on both ends of the spectrum. It’s one of the reasons the company is able to compete for business among all demographic groups.
By contrast, Esurance is unlikely to do well among older drivers who tend to shy away from purchasing auto insurance policies online.
The last online insurance company on our list is United Services Automobile Association. This company is a bit different than most, as it is dedicated to serving the U.S. military and their families. As such, not everyone can purchase an auto policy from them.
For those who are eligible, J.D. Power and Associates has given the company the second-highest ratings for 2012; second only to The Hartford. In all likelihood, their limited customer base is what prevents them from ranking Number One.
USAA gets a perfect “5″ rating for their website, call center, policy offerings, and price. Since they don’t utilize local agents, they haven’t been given a rating in that category. But getting the best possible score on all the others indicates that USAA is a great company with which to work.
The company was established in 1922 by 25 Army officers who were unable to find standard auto insurance for their vehicles. They pooled their money to collectively insure one other, and the company was born.
Since then, USAA has weathered all sorts of financial storms without ever looking back. As of 2010, USAA was worth some $18.7 billion.
If you’re thinking of purchasing auto insurance online you might consider the top companies we listed here. They’ve all built a fine reputation for providing great policies at great prices.
Just remember to obtain quotes from as many companies as you can, and compare them line by line. That’s the best way to make sure you find the right policy for you.
You can get started obtaining those auto insurance quotes right now by simply entering your ZIP code into our FREE search tool!