The Best Cheap Car Insurance for 2020 - MONEY

Posted: 19 May 2020 12:00 AM PDT

You want to protect yourself and your car from accidents, but not while spending a fortune. What coverage level should you get for your particular situation, and what can you do to lower your overall costs?

Every state has different minimum requirements for what car drivers need to cover, so it's possible to get away with the bare essentials. Will this save you money? Yes. Will it help you out when an accident occurs? Not necessarily. Since there are different types of coverage for different situations, only having the bare minimum might be more problematic in the long run. For this reason, it's important to research what the right coverage amount is for you and your car, and look for insurance companies that offer a policy suited to your needs.

Companies offer six basic types of car insurance coverages:

Liability: Only covers accidents caused by your negligence. Liability is split into two coverages, and their names are self-explanatory: property damage, and bodily injury. You can set coverage as low as $1,000 and as high as $500,000, although more coverage is always better since it will protect you from extra out-of-pocket costs when the unexpected strikes.
Comprehensive: Protects your car from not-at-fault situations, such as having it stolen or damaged from natural disasters and/or collisions with animals.
Uninsured/underinsured Motorist: This protects you and your car in the event that a person without insurance collides with your car.
Personal Injury Protection (PIP): Covers medical expenses for you and your passenger, regardless of who was at fault. This type of insurance also covers loss of wages due to an accident. PIP is required by law in some states, so check to see if yours is one of them.
Medical Expenses: also covers medical expenses for you and your passenger. It is less comprehensive than PIP, since it won't cover loss of wages.

Of all six coverages, the most important are liability, comprehensive and PIP, as these cover almost every situation you might encounter when dealing with an accident. Getting every single type of coverage can be very expensive, so if you're trying to cut costs, you need to find a way to pay less without risking losing the coverage that you need.

Here are 4 Important things about cheap car insurance:

Discounts are the key to cheap car insurance: the more a company has, the better.
Companies may not have the same discounts available in every state.
If you don't drive much, pay-as-you-drive insurance might help you save more.
Car insurance premiums depend on many factors. Therefore, they always vary from person to person.

How To Find The Best Cheap Car Insurance

To get cheap car insurance, there are some factors you can control, such as your credit score, driving history, coverage amount, and the set deductible. But there are also factors you can't control, like your age, gender, marital status and place of residence.

So, if you can only control the amount of coverage you buy and a handful of the factors that companies take into account when determining premiums, how can you secure cheap car insurance for your vehicle? You can do this by researching two things: the number of discounts each company offers, and whether or not they have usage-based insurance options available.

Usage-based insurance either rewards you with high discounts, between 20 to 30% off your premium, or it only charges you on a by-mile basis. In both situations, you're putting your privacy in the company's hands, since they get to track your car's whereabouts and/or your driving habits as long as you're subscribed to this type of insurance. How do companies gather this information? By using a telematics device —called a black box— that you plug into your car, or through an app that you install on your phone.

There are two types of usage-based insurance:

Pay-How-You-Drive (PHYD) Insurance: This uses your driving habits and location to establish the amount of discounts you'll receive. Habits include vehicle speed, fuel levels, tire pressure, and trip distances, among others.
Pay-As-You-Drive(PAYD): Only takes into account the miles you drive per day, and charges you on how much you've driven on a monthly basis. You also have to pay a standard monthly charge, regardless if you drove your car or not.

Below, we break down the options from 6 national brands and their cheap car insurance options.

Progressive: Best for Students
State Farm: Best for Rental Car Options After Accidents
Liberty Mutual: Best Discount Variety
Root: Best for Safe Drivers
Travelers: Best for Hybrid-Electric Vehicles
Geico: Best Annual Rates
Quote Wizard: Best Marketplace

Cheap Car Insurance Company Reviews

Progressive: Best for Students

Progressive's biggest strengths is not only its practical features, like its "Snapshot" telematics program tool and the addition of pet coverage in its collision coverage, but its focus on discounts for high school and college students, who are considered riskier to insure than adults. Progressive has four different discounts for high school and college students, including multi-car, good student, teen driver, and distant college student. These discounts are fairly simple to get: the good student discount only requires that students maintain a B grade through their school or college year, while the distant college student discount is available for those 22 or younger who need to travel more than 100 miles to get to their school. Don't worry, if you're an adult, Progressive also has 10 other discounts you can apply for.

Progressive also protects drivers through its small and large accident forgiveness rewards programs. You get small accident forgiveness the moment you sign up, and it prevents your rates from increasing if your claim is $500 or lower. Conversely, large accident forgiveness rewards prevent rate increases regardless of cost or who was at fault.

Unfortunately, Progressive has the second lowest number of discounts on this list, totaling 13. Their large accident forgiveness is also pretty hard to get since, in order to qualify, you can't be in an accident for at least three years, and you need to be a Progressive policy holder for five years or more.

State Farm: Best for Car Rental and Travel Expense Coverage

If you had an accident with your vehicle and it's at the shop for repairs, or if the accident occurred more than 50 miles away from your home, then you'd be glad to choose State Farm as your car insurance company.

State Farm has the most comprehensive rental car and travel expense coverages on the market, for not only does the rental car coverage pay for your rental car while your vehicle is being fixed, but it also can repay up to $500 of the deductible if you suffer an accident while driving the rental. And if you get in an accident while traveling, they cover transportation, meals and lodging for you and your family members for up to $500, while also covering trip expenses for when you pick up your car. However, for travel expense coverage to apply, the accident your car suffered must be covered by your comprehensive or collision insurance.

Though State Farm doesn't have as many discounts as other companies on this list, with 11 to choose from, you still have a chance to substantially lower your premiums. The company also offers two telematics programs: the"Drive Safe & Save," meant for customers 25 and up, and the "Steer Clear Driver" program, aimed at drivers below the age of 25. Both of these programs can provide up to 30% off the total costs of premiums.

Liberty Mutual: Best Discount Variety

Looking to qualify for as many discounts as possible? Then Liberty Mutual is the right insurance company for you. With 17 discounts to choose from, and with simple requisites (choosing to receive statements online is enough to grant you up to 3% off), you'll qualify for several different options. Liberty Mutual also offers more specific discounts than other insurers, including military and alternative-energy discounts for hybrid cars.

Liberty Mutual also offers usage-based insurance through their PAYD and PHYD insurance options, called the ByMile and RightTrack programs, respectively. The PAYD option is meant for drivers who rarely use their vehicle, as it charges a base-rate premium that's modified by how many miles you drive — the less you use your car, the cheaper the overall costs will be. RightTrack measures how well you drive, granting as much as 30% off premiums if you drive with care. Unfortunately, RightTrack is only available in 42 states, so you must contact Liberty Mutual directly to check for availability.

Root: Best for Safe Drivers

Driving carefully pays with Root, as the telematics-oriented insurance company breaks all discount averages on the market. Typically, subscribing to a PAYD or a PHYD grants an average discount of 30%, but with Root, you can save up to 52% off your premiums. Everything is done through Root's app, which allows you to change your coverage levels at any time. Root also offers roadside assistance for free, which is a feature that insurance companies usually offer as an add-on. Unfortunately, their roadside assistance only applies to 3 accidents for every six months. Root only services 37 states, leaving Florida, Kansas, Wyoming, Idaho, Minnesota, Wisconsin, Michigan, New York, Vermont, New Hampshire, Maine, South Dakota, and New Jersey on the sidelines.

Root's strongest feature, which is also its biggest drawback, is that the company prides itself in only insuring good drivers. To see if you qualify for Root, you need to install its app on your phone and drive with it for three weeks. If you get a quote, you're considered a good driver, but if you don't, not only does Root consider you a bad driver, but it also doesn't allow you to take the test ever again. It's understandable that a company wants to only insure the best drivers out there, but it's disappointing to know that the best telematic options on this list can be so limiting to potential customers. Finally, Root doesn't cover TNC drivers when they're on duty, so it's definitely not a great option for uber or Lyft drivers.

Travelers: Best for Hybrid-Electric Vehicles

At 10%, Travelers has the highest discount for electric or hybrid vehicles, making it the best insurance company for these types of cars. To apply, it's as simple as enrolling your hybrid or electric car with Travelers and requesting the discount. Travelers also has 11 other discounts, including driver training, early quote, multi-car, and new car discounts. If you prefer use-based insurance, Travelers also covers you through their PHYD program, called Intellidrive. How does it work? After using Travelers' telematics device or Intellidrive phone app for 90 days, it will calculate how safe or unsafe of a driver you are. If you are determined to be a safe driver, you can get from 15 to 20% off your premium.

However, having only 12 discounts means that Travelers is the lowest discount-provider on this list, so if you're looking to get as many discounts as possible for your car insurance, you'll be better off looking at our other options.

Geico: Best Annual Rates

Geico has the lowest annual rates for non-military drivers, averaging $2,145 for good drivers and $5,6653 for teens. Not only does this make Geico an affordable care insurance option, the company also offers the third highest number of discounts of all the companies on our list, with a total of 15. To make your life easier, Geico's website even classifies each of their discounts by type, and they list the average savings of each, so that you know how much you're saving before even applying.

Geico also offers a PAYD insurance option through their DriveEasy program, but since it's a new venture for the company (they announced it in 2019), it has less reviews than all the other telematic insurance programs that we evaluated. This isn't necessarily bad, but a longer history can help determine reliability or the lack thereof.

QuoteWizard: Best Marketplace

QuoteWizard isn't an insurance company per se, rather, it works as a middleman between you and potential car insurance companies instead. What makes QuoteWizard unique is not only its large list of partners (29 in total) but also that its quoting process doesn't ask you to include your social security number or your driver's license number. Typically, car insurance marketplaces ask for your social security number and driver's license number to check your credit score and your vehicle record, but QuoteWizard is an exception.

Additionally, QuoteWizard's website lets you compare all their partners head to head, explaining their pros and cons, complaint data for each, financial ratings, and even their discount availability. Simply choose the companies that you want to compare, and QuoteWizard will break down all of this information, allowing you to make a more informed decision.

However, since QuoteWizard is an aggregator, it doesn't provide quotes directly, but rather sends all the information you input on its website to its partner list, who in turn provide personalized quotes for you over phone or email. This means that by using QuoteWizard, you are deliberately consenting for other companies to contact you, so if this seems too invasive for you, we don't recommend you use this website.

How to Find High Quality Cheap Car Insurance

For the companies here, we focused on two factors: discount availability, where you can apply to as many as you qualify for, and telematics-based programs that either offer cheaper insurance alternatives (PAYD), or provide additional discounts to your premiums (PHYD). We also looked at companies that offered more than just discounts, such as extra coverage or added benefits at little to no extra cost. Examples of this are rideshare insurance, accident forgiveness, roadside assistance, and free apps for added benefits.

Discounts

To offer as much discount potential as possible, we looked for car insurance companies with a minimum of 11 available discounts. On average, each discount can save you between 1% and 3% off your premiums, but there are some discounts out there that can help you save as much as 30%. It's very important to note, however, that discount availability and percentages vary greatly from state to state, so it's of utmost importance to contact each company you're interested in to verify what discounts are available in your area, and how much you'd save if you qualify for them. Furthermore, company websites might sometimes omit some of their discounts because they're either new, they need to be asked for over the phone, or because they've simply forgotten to add them. For this reason, you should always be willing to call car insurance companies and ask whether there are any other hidden discounts you might qualify for. Phone representatives are very knowledgeable of all the discounts their company has to offer, so they'll be able to comprehensively list all those available to you, as well as give you an estimate of how much you'll be saving overall.

Usage-Based Insurance

A popular trend among car insurance companies, usage-based insurance is divided into two types: pay-as-you-drive (PAYD) and pay-how-you-drive (PHYD) insurance. The first one is a great option for seniors, students, or any other user who rarely drives their car, since PAYD insurance only charges you for how many miles you drive per day, in addition to a standard monthly fee. Mileage fees are usually capped at 150 per day, so driving beyond that typically won't cost you extra. PHYD, on the other hand, focuses solely on your driving habits, so the more careful that you are, the higher your discounts. If you choose PHYD, you need to keep an eye on various factors to assure that you get the highest discounts possible. These include: the miles that you drive, accidental or hard stops, whether you drive during the day or night, and whether you follow the speed limit.

Telematics

But how do companies even know how many miles you drive daily, let alone your driving habits? This is done through a telematic device that's provided by insurance companies, either through a plug-in device or a phone app. These will measure all of the mentioned factors and then deliver the data to the insurance company for analysis. The less you drive or the more careful you are when you do, the more you'll save.

You should be aware that all telematic devices need to be calibrated to your vehicle, and this process can take from three to four weeks. This means that if you want to benefit from usage-based insurance, you will have to exercise patience.

Extra Coverage and Benefits

Having discounts and various insurance options is great and all, but can companies offer more? Yes, they can — and they usually do, which is why we also focused on finding companies that balanced discounts and usage-based insurance with additional perks for free or at a price. These include: additional coverage, like rental car insurance, traveler's expense, ridesharing, and roadside assistance as well as uncommon discounts like hybrid vehicle and military discounts, and other benefits like a rewards program with monthly or yearly rewards, such as Progressive's accident forgiveness.

Watch Out for Price Optimization

Among the most mischievous trends that exist in the car insurance industry is what is known as prize optimization. As of 2020, this practice has been banned in 20 US states, since its primary purpose is to profit from customers who rarely switch between insurance companies. Through price optimization, companies gather all your personal data that isn't necessarily connected to your driving habits, which may include your web browsing history, shopping behavior, social network interactions, and even your online mail subscriptions. With this, they create an algorithm to determine how likely you are to drop them and subscribe to another insurance company.

If this sounds very invasive, it is. But here's the kicker: if they conclude that you're unlikely to leave them for another company, they'll take advantage of your loyalty and begin increasing your premiums by small amounts on a monthly or yearly basis. If you see your rates go up without a reason, contact your car insurance company immediately.

Summary of our Cheap Car Insurance Companies

Progressive: Best for High-Risk Drivers
State Farm: Best for Rental Car Options After Accidents
Liberty Mutual: Best Discount Variety
Root: Best for Safe Drivers
Travelers: Best for Hybrid-Electric Vehicles
Geico: Best Annual Rates

Quote Wizard: Best Marketplace

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