Year after year, auto insurance regularly makes headlines in articles all over the US. Unlike other expenses associated with your vehicle, you’ll need to purchase a car insurance policy each year to stay on the road legally. That’s right—every state requires drivers to prove they have the means financially to cover any damages sustained while they’re behind the wheel. An auto insurance policy is legally required in 49 states. For example, New Hampshire allows their drivers to purchase an insurance policy or prove they have enough assets to cover damages on their own dime.
With so much on the line and the consistency in which you’ll need to purchase a policy, it makes sense to find the most affordable car insurance possible that won’t leave you high and dry when you need it the most.
We’ve helped narrow in on the 5 best cheap car insurance carriers that will still provide great coverage. But first, let’s look at what goes into pricing an auto policy.
Factors That Affect Car Insurance Premiums
Ever wonder how insurance carriers come up with their premiums? Here’s a breakdown of the main factors contributing to your premium.
Where You Live
While the national average for someone with good credit is $1,758, that number changes based on your state’s car insurance rates. Some states have naturally lower rates than others. For example, as of April 2023, auto insurance in Idaho had an average yearly cost of $743, while California averaged policyholders $1,466.
Your Credit Score
Not every carrier will look at your credit score, but many will. Poor credit will result in higher premiums, while good credit usually earns you a discount.
Fun Fact: If you live in Hawaii, Massachusetts, Michigan or California, you don’t have to worry about credit scores—insurance providers aren’t allowed to use your credit score to determine your premium.
Your Driving History
This one is a bit of a no-brainer. You can generally expect to pay lower premiums with a clean driving record. However, if your driving record has speeding tickets or a DUI, you are considered high-risk, and your premium will reflect it.
The Car You Drive
Some cars cost more to insure than others. For example, a Ford Mustang generally carries a higher premium than a Ford Focus, as carriers consider what type of activities will most likely occur in the vehicle and how much it will cost to repair. Similarly, new cars often cost more to insure than older ones, especially if you still carry an auto loan and need full coverage.
Your Deductible
Your deductible is the part you’re willing to pay in the event of a claim. Not surprisingly, when you’re willing to help cover more of the cost of a claim (higher deductible), your carrier will give you a break on your premium.
If you don’t love the idea of increasing your deductible across the board, keep in mind that you can have custom deductibles for your collision and comprehensive coverage. (Collision coverage will help cover damages to your car in case of an at-fault accident, while comprehensive coverage helps cover things like broken windshields and hail.)
Sometimes increasing your deductible on your collision coverage but maintaining a low (or even $0) comprehensive deductible is all it takes to keep your policy within budget.
Your Coverage Options
Another easily recognized factor affecting your premium cost is the coverage you would pay for full coverage car insurance. You won’t pay more for liability insurance than for full coverage car insurance. Similarly, the amount you carry for liability insurance can change. Your local insurance agent will help make sure you meet the state minimums.
The 5 Cheapest Car Insurance Companies In 2023
Ready to find some great cheap car insurance that won’t leave you skimping on coverage? Here are some of the biggest names known for saving you cash.
1. Nationwide
While Nationwide provides several insurance policies, it is best known for its affordable car insurance options. This company started out as a small mutual company owned collectively by farmers in Ohio to the Fortune 100 company it is today. However, despite the growth, Nationwide still prides itself on personable agents that are on your side when you need them.
This carrier offers some of the most comprehensive benefits and coverage options, including vanishing deductibles for each year you are accident-free and an extensive loyalty reward program for its members.
Company Features:
- Gap insurance
- Vanishing deductibles
- Multi-policy discounts available through bundling
- Loyalty reward program that offers accident forgiveness, car key replacement, and more
- SmartRide & SmartMile programs that lower your premium based on car usage
Things To Keep In Mind:
Despite its name, Nationwide does not service all states in the country. Also, this company ranks lower than others for customer service satisfaction.
2. Geico
You probably know Geico for their little green gecko Martin and his famous tagline: 15 minutes could save you 15% or more on car insurance. But unlike much of what’s seen on TV, some substance supports this claim.
Geico has over 85 years of experience in the insurance industry and offers a ton of credibility for a cheap car insurance company. Policyholders can choose from a number of different types of policies, including auto, RV, boat, motorcycle, homeowners, renters, life, pet, umbrella, business, and identity protection.
As if that wasn’t enough, customers that switch from other insurance providers save an average of $500/year.
Company Features:
- 85 years of experience
- Multi-policy discounts available for bundling
- Good for people with poor credit
- User-friendly mobile app and robust website
Things To Keep In Mind:
While Geico offers a number of policies, with especially great auto insurance rates for those with poor credit, they don’t offer gap coverage or rideshare insurance. So if you drive for Uber or Lyft, you’ll need to look elsewhere. Also, this company relies heavily on call centers, so you won’t find a local agent as easily as other companies.
3. State Farm
State Farm has made a name for itself by being a friendly neighborhood insurance company. But don’t let that make you think this carrier can’t hold its own. State Farm is one of the biggest insurance companies in the world and has been serving Americans for 100 years.
State Farm policyholders enjoy affordable auto coverage with the option to obtain a number of discounts, including multi-policy and safe driver. This company also offers rideshare insurance, unlike some of the others on this list.
Company Features:
- Affordable coverage for those with hits on their driving record
- Rideshare coverage available
- Multi-policy options for bundling
- Discount programs available for teen drivers and students
- Drive Safe and Save program rewards good driving
- Local agents available to help when you need them
- Good customer reviews
Things To Keep In Mind:
State Farm currently doesn’t offer coverage in Massachusetts or Rhode Island. Also, they don’t offer gap insurance, which would help pay off your remaining auto loan in case you total it.
4. USAA
USAA regularly comes in below others in regards to cheap auto insurance companies, but there is one catch—this provider is only available for United States military members and veterans.
This company was founded in 1922 and offers coverage in all 50 states. USAA regularly outperforms competitors regarding rates for drivers of all ages (seniors, adults, and teens) and for coverage after incidents like speeding tickets, accidents, or DUIs.
Company Features:
- Available in all 50 states
- High customer reviews and loyalty
- Affordable for drivers of all ages
- Ranks highly for affordable coverage after speeding tickets, DUIs or accidents
- Options for garaging your car during deployments
Things To Keep In Mind:
As mentioned earlier, only US military members and vets can purchase insurance through USAA.
5. Progressive
Progressive is the third biggest personal auto insurance carrier in the country and offers customizable coverage to meet your needs. One of their most unique features is the Name Your Price tool, which provides coverage options based on the price you choose.
Progressive also offers coverage for pets in case they are in the car during an accident and a number of savings, like reduced deductibles and discounts for safe driving.
Company Features:
- Name Your Price tool
- Discounts for safe driving
- Rideshare coverage
- Pet injury protection included with collision coverage
- Deductible savings each year, you are free from claims
Things To Keep In Mind:
Progressive scores below some others on our list in regard to customer satisfaction with claims.
Tips To Reduce Your Car Insurance Costs
Regardless of which company you choose, here are a few tips to help lower your car insurance costs.
Bundle
Most companies offer discounts on your car insurance if you bundle it with another type of policy, like home, renters, boat, or life.
Get Multiple Car Insurance Quotes
Even if one of the companies on our list is your favorite, be sure to call around and get the best price. It’s helpful to include your current quote when getting a new one so the agent can match the coverage and you can compare apples with apples.
Also, it’s common for insurance carriers to change rates. So even if you have an established policy and feel pretty good about it, it’s always a good idea to call around every year to make sure you’re still getting the best deal.
Ask About Car Insurance Discounts
Car insurance carriers offer a number of discounts to help lower your premium. Some of the most popular options include:
- Safe driving
- Car safety features such as automatic lock and alarm
- Good student discount
- Safe driving habits monitored through an app
- Low-mileage discounts for people that don’t drive often
Have a ticket or accident on your record? You may also qualify for a defensive driving course, which would help lower your premium.
Cheap Auto Insurance Made Easy
Auto insurance is a legal requirement in most states, but luckily, it doesn’t have to break the bank each time you enroll in a new policy. When it comes time to renew your policy (or purchase one for the first time), be sure to shop around and get the best coverage and price for you. Also, don’t forget to ask about discounts and reward programs offered through the carrier. Knowing what to ask is half the battle in finding good coverage for a great price.
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