5 best cheap car insurance companies [2021 guide] – MarketWatch


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Just because you’re required to have auto insurance doesn’t mean you have to pay an arm and a leg to get it. There are many ways to find cheap car insurance, protecting your vehicle and your wallet at the same time.

Of course, you don’t want to go too cheap, because you could end up with a company that has poor customer service or can’t fulfill its claims obligations. We’ve researched dozens of the best car insurance providers to find companies that are both affordable and reliable. Based on price, our top five picks for cheap auto insurance are USAA, Erie, GEICO, Progressive and Root Auto.

Since prices are based on your driver profile, vehicle and location, the best way to shop is to compare auto insurance quotes from multiple providers. Click below to compare free car insurance quotes from leading companies.

In this article:

  • Top cheap car insurance companies

  • How to get cheap car insurance

  • Factors that can raise or lower your auto insurance rates

  • Average car insurance costs

  • Find cheap auto insurance in your state

  • Frequently asked questions

  • Our methodology

Top cheap car insurance companies

Below are our top recommendations for car insurance based on cost. The following providers stand out from the competition as the best cheap auto insurance providers not only for the discounts they offer but also for their customer service and strong industry reputations.

Cheap Car Insurance Company

Cost Rating

Best For

#1 USAA

9.5

Military families

#2 Erie Insurance

9.0

Basic coverage

#3 GEICO

8.5

Most drivers

#4 Progressive

8.5

High-risk drivers

#5 Root Auto

8.5

Mobile experience

Best for military families: USAA

If you’re a military member, veteran or member of a military family, USAA may be the cheapest option available to you. If you meet the requirements, you should consider comparing quotes from this company when you’re shopping around. 

USAA gives discounts for military installation, safe driving, good students, low mileage, multi-vehicle coverage and more. Here are a few other things we like about USAA:

  • A++ AM Best financial strength rating, indicating that the insurer has a superior ability to pay customer claims

  • High ratings from J.D. Power surveys, which indicate a smooth claims process, easy purchasing process and overall customer satisfaction

  • A- Better Business Bureau (BBB) rating, indicating that USAA has sound business practices and works to solve customer complaints

  • Options for accident forgiveness, guaranteed asset protection (GAP), car replacement assistance (CRA) and usage-based insurance

Best for basic coverage: Erie Insurance

Erie Insurance is available in 11 eastern states — Illinois, Indiana, Kentucky, Maryland, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Wisconsin — as well as Washington, D.C. In addition to its prices, the company is known for customer service and consistently performs well in industry surveys. For example, Erie was ranked in the top three spots in the J.D. Power 2020 U.S. Auto Insurance Satisfaction StudySM for the Mid-Atlantic, North Central and Southeast regions.

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Erie Insurance is best for drivers with a good driving record and a good credit score. If you meet those requirements, auto insurance can be very affordable. Notable discounts include a new driver discount of 20% and a multi-policy discount of up to 25%. Here are a few more reasons we recommend Erie:

Best for most drivers: GEICO

Because USAA has eligibility requirements and Erie Insurance is regional, most drivers should consider GEICO for cheap car insurance. The company is the second-largest car insurance provider in the U.S. and has been in business for over 80 years. GEICO can be a great option whether you want to get full coverage, just the minimum or customize a plan.

Drivers in all 50 states can get cheap auto insurance from GEICO, though drivers with accidents on their records may find better prices from other companies. GEICO’s notable discounts include 25% savings for insuring multiple vehicles and a 15% student discount. Here are a few more things we like about GEICO:

Best for high-risk drivers: Progressive

The nation’s third-largest auto insurance company, Progressive covers millions of vehicles per year and can be one of the most affordable choices for coverage. Not every company offers friendly prices for high-risk drivers, but Progressive does. Motorists without much experience or those with a DWI or DUI on record can generally find cheap car insurance compared to competitor plans.

Progressive has many discount opportunities, including a teen driver discount, a multi-car discount that can save you up to 12% and a pay-in-full discount. Here are a few more things we like about the auto insurance provider:

Best mobile experience: Root Auto

If you’re familiar with Root Auto, you know it’s different from traditional car insurance companies. The provider only offers insurance based on your current driving habits. You download an app, drive for a couple of weeks and then get a quote based on your driving.

For good drivers, Root can provide very cheap auto insurance in the 30 states it serves. Since Root mostly insures good drivers, costs are lower for everybody. But that also means Root doesn’t offer quotes to everyone, and it can charge more for people with bad driving habits. The mobile app tracks all of your driving, so it’s probably not the best option for couriers or other people who drive for work. Here are a couple more things to know about Root:

How to get cheap car insurance

Auto insurance quotes are based on your situation, your desired coverage level and the range of discounts a company provides. Some things are set in stone — you can’t erase an at-fault accident from your recent history, for example. That said, there are a few ways you can improve your chances of finding cheap auto insurance.

  • Look for discounts: Common discounts from auto insurers include multi-vehicle, bundling, military, new driver, homeowners, good student and good driver discounts. Search for the company that gives the best discounts for you.

  • Improve your driver profile: You can raise your credit score to get cheaper insurance in many states. Also, being a good driver over time will lower your rates.

  • Try usage- or habit-based programs: You can get a usage-based discount if you drive less than average, since you’re less likely to get into an accident. And if you’re a good driver, you can enroll in a habit-tracking program like Progressive’s Snapshot or use Root Auto to save money.

  • Shop around: One basic technique to find cheap car insurance is to shop around. You can compare quotes every time your policy is up for renewal to make sure you’re getting a good rate, too.

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Factors that can raise or lower your auto insurance rates

Insurance companies look at many different things when deciding what you should pay for a policy. Here are the main factors:

Factor

How It Affects Your Car Insurance Premium

Age

Generally, people have fewer accidents as they age and gain driving experience (up to a point). Teen drivers pay the most, followed by drivers under 25.

Marital status

Married people tend to have fewer accidents, so they pay less for car insurance.

Car make and model

Cars that cost more to repair also cost more to insure. This applies to collision and comprehensive insurance, which cover your own car. Safety equipment like seatbelts and airbags can affect the price as well.

Annual mileage

People who commute long distances and put many miles on their cars pay higher insurance prices.

Driving record

A clean driving record can reward you with discounts, while a poor one will make your insurance premiums rise. Having a DUI will make your rates jump up, and you’ll be deemed “high risk.” While a single accident in your driving history raises rates, having multiple at-fault accidents lands you in the high-risk category too. Minor traffic violations increase rates but to a lesser degree.

Credit history

Most states allow car insurance companies to consider your credit history when determining prices. Poor credit will make your rates go up, and vice versa.

ZIP code

Urban areas have higher rates of theft, accidents and vandalism, so drivers in cities pay the highest rates. Parking in a garage can sometimes lower your rate.

State requirements

States range from requiring almost nothing to requiring many types of insurance. You’ll pay more for coverage as more types are required.

Desired coverage

Car insurance rates rise as you add more types of coverage or choose higher coverage limits. Drivers only looking for the minimum coverage, like basic liability coverage, will generally have low rates.

Deductible

A high deductible will lower the overall cost of the policy, and vice versa.

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Average car insurance costs

According to the National Association of Insurance Commissioners (NAIC), the average annual cost of car insurance coverage ranges from about $660 to $1,444 depending on your state. Here are the top five most expensive and cheapest states for car insurance:

Most Expensive States

Average Cost of Car Insurance

Cheapest States

Average Cost of Car Insurance

Louisiana

$1,443.72

North Dakota

$659.94

Michigan

$1,358.62

Maine

$667.38

Florida

$1,356.90

Iowa

$674.33

New Jersey

$1,350.28

Idaho

$678.57

New York

$1,349.72

South Dakota

$693.42

*Data reported by the NAIC.

Find cheap auto insurance in your state

To recap, here are our top choices for cheap car insurance:

  1. USAA: Best for military families

  2. Erie Insurance: Best for basic coverage

  3. GEICO: Best for most drivers

  4. Progressive: Best for high-risk drivers

  5. Root Auto: Best mobile experience

Since prices depend on so many factors, cheap insurance looks different for each driver. However, there are always cheaper and more expensive coverage options out there, and the best way to find the most affordable choice is to compare multiple insurance quotes online. It may take some research, but in the end, you can likely save money on your next car insurance policy.

Frequently asked questions

Who offers the cheapest auto insurance?

USAA, Erie Insurance, GEICO, Progressive and Root Auto offer some of the cheapest auto insurance on the market. There are many discount opportunities you can look into to find affordable auto insurance coverage, and some companies offer usage-based insurance policies.

What’s the cheapest type of car insurance?

The cheapest type of car insurance depends on what’s required in your state. Many states only require liability insurance, so you can get by with a simple liability policy. Other states require medical coverage and uninsured/underinsured motorist coverage, so the cheapest auto insurance policy for you will have to at least include those types of coverage.

You can generally save money by going without collision and comprehensive coverage, which aren’t required in any state. However, if you get into an accident and don’t have collision insurance, you’ll have to pay for damage to your own car out of pocket.

Who has the cheapest car insurance in Arizona?

USAA and GEICO are among the cheapest car insurance providers in Arizona. The state requires a standard amount of bodily injury and property damage liability insurance, and these companies offer great rates for those requirements.

Our methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

In this article, we selected companies with high overall ratings and cost ratings. The cost ratings were informed by average auto insurance rates and discount opportunities.



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