Small auto insurance companies

Small insurance companies vs. large insurance companies

For some car owners, choosing a small insurance company could mean saving money. For example, Erie — a regional provider operating in 12 states and Washington, D.C. — has an average monthly rate of $188 for full coverage insurance, according to data from Quadrant Information Services. On the other hand, Allstate, one of the country’s largest providers, has an average full coverage rate of $279 per month. At the same time, there may be disadvantages of working with a smaller company — for instance, it might have a less-sophisticated website or app for policy management.

Advantages of small auto insurance companies

Working with a small insurance company may have several advantages compared to working with a large insurance company. Here are some of the most significant upsides you might see with a small but mighty carrier.

Personalized customer service

Small insurance companies may have more individualized customer service compared to large insurance companies. If your insurance agent is local, they may be able to meet with you in person and help you determine coverage options tailored to your area. Also, smaller insurance companies rely on keeping their book of business active and consistent, meaning they work very hard at maintaining policyholder satisfaction.

More affordable rates

Some small auto insurance companies may offer cheap insurance rates because they do not spend as much money on staffing and advertising. A small insurer who only writes policies in areas with relatively low risk may also be able to extend lower rates to policyholders. However, it is important to note that this is not always the case. It is also possible that a local insurance company will offer higher rates than a national insurance company.

Supporting a local business

One of the main reasons many drivers like working with local car insurance companies is that it allows them to support a local business. The money they pay in premiums goes back into their community, as opposed to a large corporation. Keep in mind, though, that not all small car insurance companies are local to your area, and large insurers may have agents who are local that you can support as a small business owner.

Specialized coverages

A local agency may offer more options for drivers with unique needs or who fall into a high-risk category. Since they are a part of the community, they may be more keyed into the probable risks and solutions in the area. For example, a local agency may offer full glass coverage in an area prone to windshield replacements due to rocky roads where more prominent providers don't offer that option.

Disadvantages of small auto insurance companies

While small auto insurance companies may offer unique benefits to drivers, there are also potential disadvantages. Here are a few.

Limited coverage area

Small insurance providers are often limited to specific coverage areas, whereas most large insurance providers offer coverage to customers in nearly every state. For example, Plymouth Rock offers car insurance policies in just six states, while Alfa Insurance is only available to drivers in Alabama, Georgia and Mississippi. Just because coverage is limited to certain areas does not mean you are not covered if you drive outside those areas, but if you move, it may mean that you need to switch your carrier.

Limited digital tools

While large insurance carriers typically offer the most up-to-date technology, from intuitive mobile apps to websites with personalized quotes and online claims features, smaller companies may not. With smaller insurance companies, you may not get access to a mobile app or an online platform to file and track claims online. Smaller carriers may also not offer digitally-focused discounts like telematics programs or paperless billing.

Eligibility restrictions

Some small insurance companies will only offer auto coverage to certain niche drivers, customers or members. For example, a smaller carrier may not insure drivers with poor credit or high-risk drivers with accidents or moving violations on their record.

Are smaller auto insurance companies cheaper?

Average car insurance rates from small insurance companies vary significantly. Some smaller insurance companies offer lower-than-average rates; others may be significantly higher. Small insurance companies might charge higher rates if they have a smaller customer base and less revenue. Larger companies may also have the advantage of spreading out financial risk over a larger number of policyholders.

The data below highlight average insurance premiums from a handful of small vs. large car insurance companies, based on market share. Remember that car insurance rates are averages across a sample population, and your rates may vary depending on several factors specific to you.

Average rates from largest auto insurance companies

Ways to save on auto insurance

If you go with a small car insurance company, there are some ways you could potentially get a lower rate. Here are a few suggestions:

• Make use of discounts: Small companies are likely to have a few discounts available to their policyholders. You could earn a discount, for example, by paying your annual premium upfront. Some regional insurance companies also have a relationship with local employers, affording their employees a group policy discount. Review your policy regularly to ensure that you are taking advantage of all the discounts that apply to you.
• Have a clean driving record: Insurers generally offer their best rates to drivers with no dings on their license because safe and careful drivers are less likely to file expensive claims. Avoid speeding tickets and other moving violations, and if your insurer offers an accident forgiveness endorsement, it might be worth considering.
• Pay in full: If you can afford to pay your entire premium at one time, you may find your carrier willing to offer you a discount. Some insurers also offer a discount if you agree to pay your bill automatically through a bank transfer.
• Maintain good credit: Keeping your credit-based insurance score high has many benefits, and one may be a preferential rate from your insurer. It can take some time to repair damaged credit, but working to pay your bills in full and on time can have positive repercussions for your premium rate.
• Participate in a telematics program: Many insurance providers may lower your rate if you participate in a telematics program. Most telematics programs use an app or device to track your driving and reward you for safe driving or low mileage.
• Bundle your policies: Some insurance carriers may extend a discount to customers who carry two or more insurance policies with the same company. Small insurance companies may offer a discount for bundling your auto insurance with your home, renters or condo insurance policy.
• Review your policy annually: Your insurance needs may change year to year as your personal circumstances fluctuate. If something in your life has changed, like your commute is much shorter with a new job, it may be worth reviewing your policy to ensure you have the right coverage in place for the changes in your life. This may also allow you to explore discounts you were previously ineligible for.

Coverage options with small auto insurance companies

Whether you choose a small insurance company or a large provider, standard auto insurance coverage options will likely be very similar. Nearly all insurance companies will offer the most common coverage options including state-minimum liability coverage, collision, comprehensive and medical payments. Personal injury protection (PIP) may also be available, especially if you live in a no-fault state.

Small insurance companies may also offer popular endorsements like gap insurance, roadside assistance and rental car reimbursement. However, you may find that local insurance providers offer fewer unique endorsements compared to large companies. You might consider speaking with an insurance agent or researching coverage types online if you’re exploring small insurance companies.

How to find a small car insurance company

Aside from asking friends and family in your area about their insurer, there are several ways to find a small or midsize car insurance carrier near you. To start, experts recommend checking customer satisfaction ratings before you sign on the dotted line. Here are some tips:

• Turn to J.D. Power: J.D. Power scores customers’ car insurance satisfaction in different geographic regions, including the New England, Central and California regions in its U.S. Auto Insurance Study and nationwide customer satisfaction in its U.S. Auto Claims Satisfaction Study. Some smaller regional carriers are included, although bigger-name companies are most prevalent.
• Check with the National Association of Insurance Commissioners (NAIC): The NAIC tracks complaints lodged against companies by consumers. On its website, users can look up complaint trends by company, year and insurance product to get an idea of how satisfied or unsatisfied customers are with the business. 
• Use the Bankrate car insurance quote tool: You can also use Bankrate’s own tool to find an insurance company based on your ZIP code. After entering some basic information about yourself and your vehicle, you’ll see a list of large and small insurance companies available to you. 

Local insurance companies

We should point out that the definition of a small insurance company is not one-size-fits-all. A small insurance company could serve an entire region of states, like the ones on our list above, or apply to a provider that only serves one very small area.

For example, Edison Insurance only sells auto insurance coverage in Florida, Maine Coast Insurance Agency sells coverage throughout Maine and Nia Insurance sells coverage in the Omaha, Nebraska area.

Frequently asked questions

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