The Ascent can help. We’ve researched auto insurance companies, compared prices from insurers nationwide, reviewed customer experiences, and performed in-depth research into dozens of different insurers. With a focus on price, claims handling, and customer service, we’ve chosen the best types of insurance for drivers in different circumstances.
Drivers from all walks of life — from typical motorists to high-risk drivers; teens to veterans — can find recommendations for the best car insurance companies to meet their needs.
The best car insurance companies for 2022
- State Farm: Best for bundling coverage
- Auto-Owners: Best for bundling policies
- Geico: Best for price conscious consumers
- Farm Bureau: Best for claims handling
- USAA: Best for military members and their families
State Farm offers multiple opportunities for discounts, including for bundling coverage. But the best savings comes from the different programs it offers for young drivers including Steer Clear as well as a good student discount. With comprehensive coverage options and low premiums, parents and teens can rest assured they’re protected in case of an accident.
- Young adult drivers can save up to 15% on coverage
- Discounts for good grades can provide another 25% savings for young drivers
- High customer satisfaction rankings
- Nationwide agent network
- Access to array of insurances under one roof
- A low credit score can increase premiums
- Agent quality within its network can be inconsistent
Stand-Out Coverage Options
- Steer Clear program offers discounts for policyholders under the age of 25
- Optional car rental and travel expense coverage pays not just for a rental vehicle but also travel expenses to the driver’s home or destination if an accident happens 50 or more miles home
- Rideshare insurance is available
Read our State Farm review
Auto-Owners insurance offers more coverage than its name implies, but it does shine for its auto coverage, among other policy types including homeowners or renters insurance, life insurance, and business insurance. People can buy all the insurance they need from one company while earning generous premium discounts for bundled coverage. Additional discounts for those who pay in full annually or who make at least 36 months of on-time premium payments can provide even more savings for the budget-conscious buyer.
- Bundled coverage discounts
- High customer satisfaction
- Roadside assistance coverage available in the U.S. and Canada
- Policies are only available in 26 states
- Policy must be purchased through an independent agent
Stand-Out Coverage Options
- Gap insurance to pay off a remaining loan or lease balance if the car is totaled
- Additional expense coverage, which pays for rental cars, food, lodging, and other incidental expenses in case of an accident far from home
- Personal Automobile Plus package which groups 10 popular additional coverage options including cellphone replacement, lock rekeying, and more
Read our Auto-Owners review
Geico is one of the most affordable insurers available, and it offers comprehensive auto insurance coverage options at premiums that beat out most competitors. Geico promises to save people 15% or more on car insurance, and assessments of policy premiums shows it lives up to its promise. Insurance is available in all 50 states, and there are additional discounts for military members, good students, federal employees, seniors, and others who belong to certain groups or organizations.
- Nationwide coverage
- Affordable premiums
- High customer satisfaction
- Efficient claims handling process
- Great online application and account management experience
- Limited insurance coverage beyond auto insurance
- Fewer local agents than competitors
Stand-Out Coverage Options
- Mechanical Breakdown Insurance, which provides coverage for repairs and is available for new or leased vehicles that are less than 15 months old and have less than 15,000 miles
- Auto Repair Xpress® program can get motorists back on the road faster after an accident as they’ll get priority repairs and streamlined claims processing
- Rideshare insurance is available
Read our Geico review
With a claims satisfaction rate of more than 90%, Farm Bureau has proven it’ll be there if something goes wrong. Farm Bureau also shines with affordable premiums and multiple ways to save, including by signing up for Driveology and earning reduced premiums by letting the insurer collect data about the motorist’s driving habits. With top-notch claims handling service and replacement cost coverage for newer vehicles, policyholders have the confidence of knowing their claims will be handled swiftly and efficiently with minimal out-of-pocket losses if a crash occurs.
- One of the highest claims satisfaction rates of any insurer
- High overall customer satisfaction
- Offers an array of discounts (multi-driver and savings for good students)
- Policyholders need to be a member of the bureau in their state
- Farm Bureau insurance is not available in all states
Stand-Out Coverage Options
- Replacement cost coverage, which is available when a vehicle is either four or five model years old or newer (depending on the state)
Read our Farm Bureau review
USAA offers military members and their families some of the best auto insurance coverage available. Premiums are lower than most competitors, there are plentiful coverage options, and many opportunities to save further with premium discounts. Free accident forgiveness coverage after five years also means premiums won’t go up if a crash happens. USAA is open only to military members, veterans, and their families. For those who qualify, it’s likely their best bet for car insurance.
- Premiums are cheaper than with most competitors
- High customer satisfaction ratings
- Policy discounts (for good students, for housing a car on a military base, and more)
- No coverage available outside of current and former military members, and their families
Stand-Out Coverage Options
- Free accident forgiveness after five years
- Rideshare insurance is available
Read our USAA review
What is car insurance?
Car insurance is a type of insurance policy that protects against financial loss. Auto insurance pays the bills if the policyholder causes an accident. Depending what kind of coverage a person buys, it also helps pay for repairs or replacement of their own vehicle.
Here are some of the costs car insurance can cover:
- Repairing or replacing the vehicle after a fire, theft, or other disaster
- Medical bills if the driver is hurt in an accident
- Lost wages if injuries from an accident stop the driver from working
- Losses another motorist causes if they are uninsured or underinsured
- Damage to other people’s property the policyholder causes with their vehicle
- Injuries others experience if the policyholder causes a crash
- Rental car expenses if the vehicle is in the shop for repairs
- Emergency roadside assistance
Motorists don’t have to buy all of these types of car insurance coverage. But they should buy the best car insurance coverage to protect against losses they can’t afford to pay for out of pocket.
How can I find the best price on car insurance?
To find the best car insurance rates, drivers will need to get personalized quotes from different insurers. That’s because prices can vary dramatically depending on an individual motorist’s circumstances.
Drivers should get multiple auto insurance quotes from at least three to five different insurers, and more if possible. There are many online websites that make it easy to get multiple quotes at once, which simplifies this process.
The fastest way to compare multiple quotes is to provide a vehicle identification number (VIN) so the car insurance company can automatically obtain important details about the vehicle.
Motorists should also be sure to look for discounts, including for safe driving or vehicle safety equipment, as well as for good grades for teens or membership in certain organizations.
How much car insurance do you need?
When selecting an auto insurance policy, drivers need to look for more than just the cheapest car insurance. They need enough coverage to ensure an accident doesn’t cost thousands of dollars, which may require paying a higher monthly premium.
How much car insurance coverage a person needs depends on their situation. However, most states have certain minimum requirements. Drivers may also wish to purchase additional protection beyond the minimum coverage required under their state’s auto insurance rules. Here are some different kinds of auto insurance drivers may need, or want, to buy.
Liability insurance covers losses that the policyholder causes other people to experience. For example, if a driver caused a crash, injuring the victim and damaging their vehicle, liability coverage would pay for the victim’s injuries and damages.
The majority of states require liability insurance coverage, both to pay for bodily injury and property damage. Under California auto insurance requirements, for example, a motorist must have:
- $15,000 in injury liability coverage per person
- $30,000 in injury liability coverage per accident
- $5,000 in property damage liability coverage
Many people may want to buy more than the minimum required insurance if they want the best car insurance. If drivers don’t and they cause an accident, they could be held personally liable. If a motorist gets into a collision and causes a death, they could be sued for millions of dollars. Having just $15,000 in coverage would do little to protect their assets.
Uninsured/underinsured motorist coverage
This pays for losses another driver should cover but can’t because they don’t have any or enough insurance. Without this, a driver who was involved in an accident with an uninsured motorist or with a driver who had no insurance could be forced to pay for medical bills and vehicle repairs out of pocket.
A few states require uninsured or underinsured motorist coverage. For example, in Connecticut, drivers must have $25,000 per person and $50,000 per accident in insured motorist coverage.
Personal injury protection (PIP)
Personal injury protection, or PIP, pays for the policyholder’s medical bills and lost wages in cases of minor accidents, regardless of who is at fault for the crash.
A total of 15 states require PIP. These are called “no-fault” states. People who live in no-fault states must use their own insurance to pay for losses after minor accidents. That’s true even if another driver were to blame.
New York is an example of a no-fault state. It requires drivers to buy at least $50,000 in PIP coverage when purchasing New York auto insurance.
There are also three “choice” no-fault states. There, motorists can opt to buy PIP coverage or choose a different policy often called a “full-tort” policy. A full-tort policy always allows someone to sue other drivers, even after minor collisions.
Collision insurance is optional, but it is important coverage many people will want to purchase. Remember, liability insurance won’t cover anything that happens to the policyholder’s own car, even with the best policy. A driver could buy collision insurance to repair or replace their vehicle in the event of a crash.
Comprehensive coverage is also optional, but many drivers will find they need it. It pays for any losses to a vehicle that don’t result from a car crash. For example, comprehensive coverage pays for windshield damage or to repair or replace a vehicle after a tree falls on it.
Getting car insurance discounts
Most insurers offer car insurance discounts that can help reduce the cost of auto insurance. Commonly available discounts include:
- Accident-free driver discounts: These are available to drivers who have gone a certain length of time without becoming involved in a collision.
- Discounts for driver monitoring: Motorists who agree to download an app that tracks their driving habits may be able to save.
- Defensive driving discounts: Completing a state-approved defensive driving discount can help motorists to save.
- Driver education discounts: Young motorists who complete driver’s education can save money.
- Driver behavior discounts: Drivers who have a clean driving history can save money, as can motorists who don’t go many miles per year.
- Good student discount: Young motorists who get good grades may be able to save. These discounts usually require at least a B average.
- Distant student discount: This provides savings on a family’s insurance policy when teen drivers are away at school.
- Bundled coverage discount: Motorists who buy multiple types of insurance policies, such as auto and homeowners insurance, will usually qualify for discounted premiums.
- Multi-car discounts: This savings is available for people who insure several cars with the same insurance company.
- Continuous coverage: Drivers who maintain their insurance year after year may find they can save on premiums.
- New-car discounts: These are available to motorists with a late model vehicle (usually one that is less than two or three years old).
- Vehicle safety feature discounts: Airbags, anti-lock brakes, anti-theft devices, and other safety features can also result in low premiums.
- Driver affiliation discounts: Savings are available from many insurers for motorists who are in the military, who work for certain employers, or who are members of certain groups
- Pay-in-full discounts: It’s often possible to save on insurance by paying premiums one time per year, rather than taking advantage of the option to pay quarterly or monthly.
- Online-only discounts: Many insurers reduce costs for drivers who purchase their policy online and manage their accounts on the internet.
- Paperless statement discounts: Drivers who sign up for paperless statements may reduce car insurance costs.
How are car insurance rates calculated?
The best car insurance companies calculate rates based on the risk of an accident. Factors that insurers consider include:
- Which drivers are on the policy: If a motorist is buying a family policy, insurers will consider the driving record of everyone in the household.
- Driving record: Insurers consider accident history and risk of speeding tickets.
- Number of miles driven: A car that is driven more frequently is more likely to become involved in a crash.
- Type of car: Vehicles more prone to accidents or theft will be more expensive to insure.
- Vehicle safety features: If a car has features that reduce the risk of theft or the chances of a crash or serious injury, this will result in lower premiums.
- Credit score: Drivers who have a stronger credit history will often pay less for insurance.
Average Annual Car Insurance Premiums (2002-2018)
Best cheap auto insurance
For drivers focused primarily on getting the lowest priced premiums, here are The Ascent’s picks for the best cheap car insurance.
- State Farm
- The Hartford
- Erie Auto Insurance
Click here to learn more about our selections for most inexpensive car insurance.
Best insurance for veterans
The Ascent’s picks for the best car insurance for military members include:
- Armed Forces Insurance
Best insurance for teens
The Ascent’s picks for the best car insurance for teens include:
- Liberty Mutual
- State Farm
What to do if you can’t get car insurance
Motorists must not drive without their state’s required minimum insurance. Doing so could lead to criminal penalties as well as devastating financial loss if an accident occurs.
Fortunately, there are coverage options for drivers who can’t buy car insurance from traditional insurers. These include:
- State-assigned risk pools: States provide an option of last resort for drivers who can’t get conventional insurance coverage. They can join the state’s assigned risk pool and will be assigned to an insurance carrier that works with the state. This may also have other names, such as a Joint Underwriting Association or shared market.
- High-risk insurers: High-risk car insurance could be the best option for motorists turned down by conventional companies. These insurers specifically work with drivers who other insurers won’t cover. While they typically charge high premiums, they can often provide more coverage than a state’s assigned risk pool would.
Car insurance agents can help drivers to enter the assigned risk pool or to find high-risk insurers.
A recap of the best car insurance companies
Personal loans vs. home equity loans: Which is right for you?
Personal loans and home equity loans can be used for making home improvements, consolidating debt, paying for medical expenses and many other purposes.
Personal loans are unsecured and have a relatively simple application process, but you’ll need good or excellent credit to qualify for the best terms. Home equity loans could be easier to qualify for if you have a lower credit score and the rates are lower, but the application process is lengthier and the loan uses your home as collateral.
Consequently, deciding which one is best for your financial situation can be challenging as they both come with significant benefits and drawbacks.
Compare Rates for Your Next Home Improvement Project
The main differences between personal loans and home equity loans
Home equity loans and personal loans are both term loans — which allow you to repay them over a set term with fixed monthly payments. And since personal loans are typically unsecured, there is less risk for you if you can’t repay. However, it results in a higher cost and shorter term than you will find with most home equity loans.
|Personal loans||Home equity loans|
|Loan amount||$1,000 to $50,000||$10,000 to $250,000|
|Rates||6.99% to 35.99%||5% to 19.99%|
|Term lengths||2 to 5 years||5 to 20 years|
|Secured vs. unsecured||Typically unsecured||Secured by home|
|Fees||Origination fees, late fees||Origination fees, closing costs, prepayment penalties, late fees|
Personal loans are designed to meet expenses that can’t be covered by credit cards or smaller loans. They are offered by banks, credit unions and online lenders. When you borrow, you pay back your loan with interest over a set term, usually two to five years.
Borrowers with good to excellent credit are more likely to be approved for a low rate, which lowers the total cost of the loan. Despite that, there are quite a few lenders that work with borrowers with poor credit.
The application process is typically done online and requires basic personal and financial information. You should compare multiple lenders to find the best deal.
Home equity loans
Home equity loans are larger than personal loans because they use your home’s equity — the value of your home minus what you owe — to determine how much you can borrow. Most lenders will let you borrow up to 85 percent of your home’s combined loan-to-value ratio.
In addition, a home equity loan has one big advantage over a personal loan: lower interest rates. But because the loan uses your home as collateral, the lender may have a claim over your home if you default.
Unlike with a personal loan, the application process for a home equity loan is a bit more involved. While you can often apply online, the process usually takes a few weeks, since an evaluation of your property must take place. You can look into options from the lender that holds your mortgage and compare other home equity loans to get a full idea on what you can borrow and what you might pay.
When to choose a personal loan
A personal loan may be a better choice than a home equity loan in some scenarios:
- You have a smaller expense: While you may be able to find smaller home equity loan amounts at local credit unions, most banks set a minimum of $10,000 or more. Personal loans, on the other hand, may let you take out as little as $1,000.
- You don’t want to risk your house: Personal loans are usually unsecured, so you can’t lose your house or any other property if you default.
- You don’t have much equity: If you lack sufficient equity in your home, you may not qualify for a home equity loan at all.
- You have excellent credit: Having excellent credit will qualify you for the lowest personal loan rates, some of which may hover around 3 percent.
Howard Dvorkin, CPA and chairman at Debt.com, says that if you’re looking to pay off credit card debt, a personal loan is a better option. “If someone has multiple credit cards — totaling more than $5,000 — and a credit score that will qualify them for a reasonable interest rate, a personal loan to consolidate debt may be the right option for them,” he says.
When not to choose a personal loan
It’s in your best interest not to choose a personal loan if you need to borrow a sizable amount of money that exceeds the lender’s loan limit. You should also steer clear of personal loans if you have bad credit and can only qualify for steep interest rates that result in excessive borrowing costs and make the monthly payment unaffordable.
When to choose a home equity loan
In some cases, a home equity loan may be the best option available. You may want to consider a home equity loan if:
- You have a lot of equity: If you’ve built up a significant amount of equity in your home, you may be able to borrow upward of $500,000, far more than you would with a personal loan.
- You don’t have the best credit score: Because a home equity loan is a secured loan, it can be easier for people with subpar credit to qualify — just know that you won’t receive the best interest rates.
- You’re looking for low rates: Home equity loan rates are typically lower than personal loan rates, meaning your monthly payment will be smaller and you’ll pay less for borrowing money.
- You want to renovate your home: If you use your home equity loan funds for renovations, you can deduct the interest paid on your taxes.
When not to choose a home equity loan
Even if you could qualify for a low interest rate on a home equity loan, you should avoid it if you have very little equity in your home. If not, the closing costs and amount you pay in interest could easily outweigh the benefit of taking out a home equity loan in the first place. Another reason to skip a home equity loan is if money’s tight and you’re living check-to-check. Otherwise, you risk losing your home to foreclosure if you fall behind on the loan payments.
Alternative borrowing options
Personal loans and home equity loans aren’t the only ways to borrow a large sum of money. If you have different financial needs in mind, try one of these alternatives.
Home equity line of credit (HELOC)
A HELOC works like a credit card. You get a line of credit secured by your home and can use those funds for almost any purpose. HELOCs often have lower interest rates than other types of loans, and the interest may be tax deductible.
As with a home equity loan, you are borrowing against the available equity in your home, which is used as collateral. You can borrow as much as you need as often as you like throughout the draw period — usually 10 years. You can replenish your available funds by making payments during the draw period. At the end of the draw period, you will begin the repayment period, which is typically 20 years.
To qualify for a HELOC, you need equity in your home. As with a home equity loan, you can often borrow up to 85 percent of the value of your home, minus the outstanding balance on your mortgage. When you apply, lenders will look at your credit score, monthly income, debt-to-income ratio and credit history.
Most HELOCs have variable interest rates, meaning your rate can fluctuate over the term of your loan. As interest rates go up, so does your payment. Also, as with credit cards, the chance for overspending is greater than with a fixed-sum loan. Without a certain amount of discipline and budgeting, you may find yourself saddled with large payments during the repayment period.
Today’s best credit cards offer a lot of advantages. Making payments on time every month can improve or build your credit rating, and many credit cards offer cash back rewards or frequent flyer miles that you can redeem on certain airlines. They are as convenient as cash and can be used as a financial safety net for emergencies.
Credit cards do have some downsides, though. Some credit cards charge high interest rates on cash advances and balance transfers. Missed or late payments can damage your credit, and there is always the chance of credit card fraud on your account. Additionally, some cards have high annual fees (from as little as $25 to more than $1,200), you may experience surcharges from merchants when you pay with your credit card and add-on fees can accumulate quickly.
Home improvement loans
The major distinction between home improvement loans versus home equity loans is that home equity loans are secured, and home improvement loans are typically unsecured personal loans.
Due to the unsecured nature of home improvement loans, they typically carry higher interest rates, but they are ideal for borrowers who are planning small or midsize renovations and don’t want to use their property or homes for collateral.
When it comes to home renovations, however, Dvorkin advises sticking to a home equity loan. “This adds value to a home, instead of putting it at risk, and helps consumers build equity in the long run,” he says. Plus, the interest used on home improvement projects may be tax-deductible if you use the loan to buy, build or improve your home.
The bottom line
The choice between a personal loan and a home equity loan depends on your financial needs. Both loan types have advantages and downsides to be considered before applying, but both are suitable options if you need to borrow money. Either way, take the time to compare all your loan options, interest rates, fees and repayment timelines before submitting your application.
- Where to get a personal loan
- How to pay for home improvements
- Should I get a personal loan for home improvements?