Why You Should Consider a Small Car Insurer to Save Money


How many car insurance companies can you name off the top of your head? We bet it’s less than 10.

In fact, more than 2,400 auto insurers nationwide are vying for your business. Still, most drivers prefer to buy from a familiar name. Nearly 60% of respondents to a recent survey said they were more likely to buy an insurance policy from a company they had seen advertised for, according to Expertise.com, which researches and reviews the best service professionals.

But these insurance giants don’t always offer the cheapest auto insurance or the best customer experience.

In fact, in 23 states, the lowest auto insurance rates were not from one of the nation’s largest carriers, according to NerdWallet’s rate analysis.

Here are three more reasons why you might want to try your luck with a lesser-known insurer.

Fewer ads can mean cheaper rates

Great insurers don’t become household names by accident. In 2020, the country’s four largest auto insurance companies spent more than $3.75 billion on advertising, according to consumer data provider Statista.

By contrast, many lesser-known carriers don’t spend as much money on ads, which can offset the amount you pay for auto insurance, says Robbie Moore, executive vice president of Blanchard & Calhoun Insurance Agency, an agency independent insurance company based in Georgia. .

Yet there is no guarantee that a smaller carrier will have cheaper fares than the big brands. Shop around with several companies, large and small, to find the cheapest car insurance for you.

Best customer service

While you may have second thoughts about working with a company you’ve never heard of before, you shouldn’t assume that a lesser-known insurer will provide poorer service.

In fact, several smaller companies have received fewer customer complaints over the past three years than the biggest names in the industry, according to data from the National Association of Insurance Commissioners, or NAIC.

Additionally, a 2021 auto claims satisfaction study by consumer research group JD Power found that, of the eight insurers that received above-average scores, only half were among the largest carriers in the world. country.

Smaller brands will often go out of their way to earn – and keep – your business. “When you make a claim, they really take the time to get to know you, and it’s a very personalized experience,” says Moore.

The same coverage (or more)

You might expect a company you’ve never heard of to offer fewer coverage options than a reputable insurer, but that’s usually not the case. All auto insurers must sell minimum coverage by law, and they usually offer standard coverage like comprehensive and collision damage waiver, which cover repairs to your vehicle.

Some smaller companies may even offer coverage options or benefits that household names don’t usually offer. For example, some carriers include free extras like accident forgiveness or pet insurance with a standard car insurance policy.

“I think they know because they’re smaller and because you haven’t heard of it, they’re not going to win your business based on name recognition,” Moore says.

Is a small business right for you?

Despite these advantages, a lesser known insurer is not always the best option.

If having a tech-friendly carrier is important to you, consider sticking with the big brands. A large company may offer high-tech offerings over its smaller competitors. You may want to check an insurer’s app and website before committing to a business.

Also, a small vendor won’t always sell fonts in as many places as a big brand. For this reason, you may need to switch carriers if you leave the area.

How to choose a car insurance company

Ready to change, but not sure where to start? Here’s how to start:

  • Always research a company before purchasing an insurance policy. Confirm it has the coverage you want and all the extras you’re looking for, like accident forgiveness.
  • Check a company’s financial strength to make sure they can pay your claim if you have to file one. You can find a carrier’s financial strength by using a rating firm like AM Best.
  • Check the customer complaint records on the NAIC website.
  • Consider using an independent insurance agent who can put you in touch with national carriers and local insurers. These agents work with multiple vendors instead of just one company. Independent agents generally work on commission and only sell policies from companies with which they partner.

More from NerdWallet

Kayda Norman writes for NerdWallet. Email: [email protected]

The article Why You Should Consider A Smaller Auto Insurer originally appeared on NerdWallet.

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