Every year, I embark on the hassle of getting fresh car insurance quotes, and every year, there is a new provider or two that I’ve never heard of. Sometimes their rates are low, but I have wondered, if I had to make a claim, would they be reliable? We asked some experts to find out, and their consensus was…“it depends.”
“You really can’t say in broad classifications that some types are better or worse,” says Melanie Musson, an auto insurance expert with AutoInsurance.org. “For example, you can’t say that online companies are better than local agencies, because it comes down to the individual companies and personal preference.”
However, there are plenty of nuances between the various types of insurers. Here’s more about those differences, plus the pros and cons between major, online and regional car insurance companies.
Major Insurance vs. Regional and Online Insurance Carriers… What’s the Difference?
Some insurance companies, like Farmers, State Farm and Allstate, are well-known national brands, which maintain brick-and-mortar offices staffed with local agents who sell their products exclusively.
Others, like Progressive, the General and Geico, solely sell policies online, through call centers and apps, and sometimes via independent insurance agents.
There are also smaller, regional insurance carriers, such as Eerie Insurance, Auto Owners and Amica, who sell primarily through independent agents.
Regardless of the type, any insurance company that is licensed in your state is held to the same standards, says Musson. So “personal preference will have a role in helping people decide if one of these is a better option than the others,” she says. “Some people don’t care if they ever have an agent they can call by name, and others would hate the idea of not having a local contact.”
Pros and Cons of Major Insurance Carriers
Major insurers maintain vast networks of agents, extensive claims departments and technology systems that make interactions easier for customers, like 24-hour claims reporting. They also tend to have strong financial ratings and diversified risk pools, meaning that if there’s a massive regional disaster, they have large customer bases elsewhere to help offset those losses.
“They also provide a brand name customers can trust and are available nationally, which means they are able to help customers all over the US, even if a customer moves states,” says Lauren McKenzie, a senior independent insurance agent with A Plus Insurance.
On the flip side, sometimes all of those brick-and-mortar locations and national advertising campaigns result in higher prices.
Pros and Cons of Online Insurance Carriers
Online companies tend to have lower overhead costs, which can mean lower premiums. “They don’t typically provide personalized service, though,” says Musson. “Depending on the company, you may have a hard time ever contacting an actual human to help you through a claims process.”
Pros and Cons of Smaller and Regional Insurance Carriers
Regional insurance companies sometimes offer lower premiums because they spend less on national advertising and their policies are tailored to your area. They are also often represented by agents who can quote multiple companies at once, so you can quickly compare a wide range of prices and policies.
Many also have excellent reviews for customer service, says Musson. “That’s their specialty. They know their demographic well and can provide coverage options that fit the region in ways a large company may not.”
On the downside, smaller carriers might not be as financially stable, and if you move to a new state, you might have to switch insurance companies.
Which Insurance Is Right for Me?
It depends. If you value personal interactions, you’ll want an agent with a local office, whether that’s an independent agent or one working solely with a major carrier. Conversely, if you like handling everything online, an online-only option might save you some money. Beyond cost, other factors to consider include coverage options, the company’s financial rating and customer reviews.
FAQ
Are regional car insurance companies financially safe/reliable?
Usually. Often, they carry reinsurance, which is insurance that covers themselves from major claims. To learn an insurance company’s financial stability ratings, check AM Best. “That can help you understand if a company is expected to remain financially stable and able to pay claims,” says Musson.
How do I check if a car insurance company is legitimate?
- Check with your state insurance department to make sure they’re licensed in your state.
- Read BBB reviews and JD Powers claims satisfaction surveys.
- Check their AM Best rating.
“These sites have all the important information about an insurance company, including financial strength, claims handling process and overall service,” says McKenzie.
Can I switch from a major insurer to a regional one mid-policy?
Yes, you can switch insurance providers at any time. A few companies charge small cancellation fees for dropping their coverage before the term is up. “Some companies may also ask for further documentation before cancelling, such as a new policy declaration showing you purchased insurance elsewhere, or a bill of sale if the vehicle is no longer owned,” says McKenzie.
About the Experts
- Melanie Musson is an auto insurance expert with AutoInsurance.org. She has been in the insurance industry for over 10 years and specializes in education and advocacy.
- Lauren McKenzie is a senior independent insurance agent with A Plus Insurance, which is licensed in 35 States.
Sources
- Jenna Bailey is founder and lead trial attorney at Bailey Law Firm.
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