Why You Should Consider a Smaller Car Insurer

Bigger isn't always better when it comes to car insurers. Smaller insurers are worth a look, too.

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How many car insurance companies can you name off the top of your head? We bet it’s fewer than 10.

In reality, more than 2,400 car insurers in the nation are vying for your business. Yet, most drivers prefer to buy from a household name. Nearly 60% of respondents to a recent survey said they were more likely to buy a policy from a company they’d seen an advertisement for, according to Expertise.com, which researches and reviews top service professionals.

But these insurance giants may not always offer the cheapest car insurance or the best customer experience.

In fact, in 23 states, the cheapest car insurance rates weren’t from one of the nation’s largest carriers, according to NerdWallet’s rates analysis.

Here are three more reasons why you may want to take a chance on a lesser-known insurer.

Fewer ads may mean cheaper rates

Big-name insurers don’t become household names by accident. In 2020, the four largest car insurance companies in the nation spent over $3.75 billion in advertising, according to consumer data provider Statista.

In contrast, many lesser-known carriers don’t spend as much money on ads, which may offset the amount you pay for car insurance, explains Robbie Moore, executive vice president of Blanchard & Calhoun Insurance Agency, an independent insurance agency based in Georgia.

Still, there’s no guarantee a smaller carrier will have cheaper rates than larger brands. Shop around with multiple companies, both big and small, to find the cheapest car insurance for you.

Better customer service

Although you may have doubts about working with a company you’ve never heard of before, you shouldn’t assume a lesser known insurer will provide worse service.

In fact, several smaller companies had fewer customer complaints in the last three years than the biggest names in the industry, according to data from the National Association of Insurance Commissioners, or NAIC.

In addition, a 2021 auto claims satisfaction study from consumer research group J.D. Power found that, out of the eight insurers that received above-average scores, only half were among the nation’s largest carriers.

Smaller brands will often go out of their way to earn — and keep — your business. “When you're going through a claim, they really take the time to get to know you, and it's a very personalized experience,” Moore says.

The same (or more) coverage

You might expect a company you’ve never heard of to offer fewer coverage options than a big-name insurer, but this is generally not the case. All auto insurers have to sell minimum coverage by law, plus they typically offer standard coverage like comprehensive and collision insurance, which cover repairs to your vehicle.

Some smaller companies may even offer coverage options or perks that household names generally don’t provide. For instance, some carriers include free extras like accident forgiveness or pet insurance with a standard auto insurance policy.

"I think they know because they are smaller and because you haven't heard of them, they're not going to win your business based on name recognition,” Moore says.

Is a smaller company right for you?

Despite these advantages, a lesser-known insurer isn’t always the best option.

If having a tech-friendly carrier is important to you, consider sticking with big-name brands. A larger company may boast higher-tech offerings than its smaller competitors. You may want to check out an insurer's app and website before committing to a company.

In addition, a smaller provider won’t always sell policies in as many locations as a larger brand. Because of this, you might need to switch carriers if you move out of the area.

How to choose a car insurance company

Ready to switch, but don’t know where to begin? Here’s how to get started:

  • Always research a company before buying an insurance policy. Confirm it has the coverage you want and any extras you’re looking for, like accident forgiveness.

  • Check a company’s financial strength to ensure it can pay out your claim should you have to file one. You can find a carrier’s financial strength using a rating firm like A.M. Best.

  • Look at customer complaint records on the NAIC site.

  • Consider using an independent insurance agent who can connect you with both national carriers and local insurers. These agents work with multiple providers instead of a single company. Independent agents generally work on commission and only sell policies from the companies they partner with.

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