Small auto insurance companies

Small insurance companies vs. large insurance companies

For many people, there may be advantages to choosing a small insurance provider, such as the potential for better or more personalized customer service. While smaller auto insurance companies may sometimes have higher average rates, that may not always be the case. For example, Erie, a regional provider operating in 12 states and Washington, D.C., has an average annual rate of $1,664 for full coverage insurance, according to Bankrate’s research. On the other hand, Allstate, one of the country’s largest providers, has an average full coverage rate of $2,936 per year. Plus, there may be other perks to purchasing an auto insurance policy from a small company.

Advantages of small auto insurance companies

For certain drivers, purchasing an auto policy from a small insurer may be a good option. 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 small car insurance companies.

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 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 policyholders.

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 provide that option.

Disadvantages of small auto insurance companies

While small auto insurance companies may offer unique benefits to drivers, there could be a few disadvantages to choosing a smaller company to insure your car. The disadvantages of choosing a small auto insurance company may include:

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.

Car insurance rates with a smaller company

The average car insurance rates from small insurance companies may vary significantly. Some small insurance companies may offer lower-than-average rates, but some may be significantly higher. Some small insurance companies charge higher rates because 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 highlights average insurance premiums from some small carriers compared to average rates from five of the largest carriers by market share. Remember that these insurance quotes are averages based on a sample population, so your rates may vary.

Average rates from largest auto insurance companies

Ways to save with a small auto insurance company

If you go with a small car insurance company, there are some ways you could potentially save money on your premium. Here are a few suggestions:

• Make use of discounts: Small companies are likely to have a few discounts available for their policyholders. You may find that some of these are easy to earn. You could earn a discount, for example, for agreeing to receive your documents digitally rather than via postal mail. Review your policy regularly to ensure that you are taking advantage of all the discounts that apply to you.
• Have a clean driving record: This might be the most important way you can save money. Insurers generally offer their best rates to drivers with no dings on their license, since statistically, 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 a high credit score: 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.

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.

When shopping for your next auto insurance policy, you might consider looking into local insurance companies during your search. We recommend checking out local insurance providers if you value good customer service or prefer to work with an insurance agent.

Frequently asked questions

Methodology

Bankrate utilizes Quadrant Information Services to analyze April 2024 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a single, 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

• $100,000 bodily injury liability per person
• $300,000 bodily injury liability per accident
• $50,000 property damage liability per accident
• $100,000 uninsured motorist bodily injury per person
• $300,000 uninsured motorist bodily injury per accident
• $500 collision deductible
• $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2022 Toyota Camry, commute five days a week and drive 12,000 miles annually.

These are sample rates and should only be used for comparative purposes.