Choosing between small and large insurance companies
Is bigger always better when it comes to finding the best car insurance company? Both small and large carriers have advantages and disadvantages. On the one hand, a smaller carrier may be able to offer a lower rate because advertising budgets are not as large. However, a large carrier may have a super-convenient smartphone app that allows you to manage your policy with a few simple clicks.
Another strategy is to broaden the scope even more when looking for the right insurance carrier. Consider how important premium rates, available discounts, customer satisfaction ratings, and a company's financial strength are to you when making a decision. Depending on your personal needs and how each carrier performs in these categories, you may prefer one over the other, regardless of carrier size.
Small vs large insurance companies
Smaller businesses are more likely to be found in communities across the United States. They are most likely staffed by local agents who live in the same community as the policyholders. The larger companies are the big names you often see advertised on television or radio, and they rely on more digital options for accessibility, such as 24/7 customer service online or by phone, or via a smartphone app.
Top 10 largest insurance companies by market share
When comparing multiple insurance quotes from various companies, many drivers find it easier to begin with the largest companies. The top ten largest car insurance companies in the United States by market share represent the vast majority of drivers in the country.
Company | J.D. Power score | Average annual minimum coverage premium | Average annual full coverage premium | Market share |
State Farm | 881/1,000 | $539 | $1,457 | 16% |
Geico | 871/1,000 | $433 | $1,405 | 14% |
Progressive | 856/1,000 | $582 | $1,509 | 13% |
876/1,000 | $696 | $1,921 | 9% | |
USAA | 890/1,000 | $384 | $1,225 | 6% |
867/1,000 | Rates not available | Rates not available | 5% | |
872/1,000 | $808 | $2,000 | 4% | |
Nationwide | 876/1,000 | $501 | $1,485 | 2% |
American Family | 862/1,000 | $918 | $1,911 | 2% |
Travelers | 861/1,000 | $469 | $1,325 | 2% |
Pros and cons of a small insurance company
Pros | Cons |
Possibility of more personalized attention | Potentially financially unstable |
Potentially lower or more competitive rates | Customer service may be slow or less available |
If the business is locally owned your money may stay in the community | Potential lack of discounts |
Pros
Possibility of more personalized attention
A smaller company has a better chance of providing the "personal touch." Because they are usually staffed by local agents, you have a name to call when you have questions or need assistance with a policy, and they may remember you without prompting.
Potentially lower or more competitive rates
A smaller company may be able to offer more competitive rates based on your coverage needs. Because a local company does not have the larger operating expenses, such as a large number of employees, benefits, and advertising budgets, they may be able to pass on the savings in the form of lower premiums.
If the business is locally owned your money may stay in the community
Where their money goes is an important factor for some people when deciding which companies to do business with. With a smaller, locally owned insurance agency or company, your money may be reinvested in the community where you live.
Cons
Potentially financial insecure
Many smaller businesses may lack the financial stability of larger corporations. This is because there is less money coming in.
Customer service may be slow or less available
Smaller businesses may lack the resources of larger corporations, which means they may not provide 24/7 customer service or may take longer to respond to calls and inquiries due to a lack of available staff.
Potential lack of discounts
Smaller businesses may not be able to offer as many discounts as larger businesses. This is because a smaller company may not make as much money, so they must take their victories wherever they can find them.
Pros and cons of a large insurance company
Pros | Cons |
More likely to be financially stable | Less personal attention |
More likely to offer discounts and savings | |
24/7 customer service |
Pros
More likely to be financially stable
Larger companies typically have access to more capital, deeper pockets, and a longer track record. As a result, they are more likely to be financially stable, increasing the likelihood that your claim will be paid out following a covered accident or event.
More likely to offer discounts and savings
Larger insurance companies are more likely to be able to offer discounts and savings programs because they have more capital and available funds. They have a large enough customer base to compensate for the money they would "lose" if they offered discounts.
24/7 customer service
Larger businesses are more likely to have a variety of tools available for customer service. They are more likely to have digital tools, such as agents, email, and phone lines. Companies that use digital tools make managing your insurance portfolio on your own time easier.
Cons
Less personal attention
Because you never know who you'll get on the phone or if you're only dealing with an online portal, a larger company may provide less personalized service to your liking.
Which one should I choose?
Instead of focusing on a company's size, the best approach is to consider what is most important to you when making a decision. You can narrow down your options once you've determined what works best for your lifestyle and driving needs. For example, if excellent customer service is a top priority, selecting a carrier with high J.D. Power customer service ratings may be the best option.
Financial strength ratings, such as those provided by AM Best and S&P, are another factor to consider. These ratings assess a carrier's ability to pay claims. If using digital tools is more important to you than talking on the phone with a local agent, keep that in mind when making your decision. Overall, choosing the right carrier boils down to which one offers the coverage you require while also balancing customer service, digital assets, financial strength, and budget.
Frequently asked questions
What is the best car insurance company?
Each service provider has its own set of rates, coverage options, and discounts. The best car insurance company is ultimately determined by your preferences. The largest car insurance companies are a good place to start, but comparing smaller, local options alongside the larger ones may provide a clearer picture of which one is best for you.
How do I know how much car insurance I need?
Almost every state requires drivers to have a certain amount of insurance. Most financial experts, however, recommend purchasing higher coverage limits to provide a greater level of financial protection. If you lease or finance your vehicle, the lender will almost certainly impose additional requirements, such as comprehensive, collision, and gap insurance.
How much will I pay for car insurance?
According to Quadrant Information Services, the average cost of car insurance in the United States is $1,674 per year for a full coverage policy. Individual rates, on the other hand, are determined by a variety of personal factors such as zip code, vehicle, and annual miles driven. Your rates may be higher or lower.