The best car insurance companies based on cost, coverage and service

Car insurance is a necessary expense for most Americans, since driving without it is illegal and public transportation options are limited outside of major U.S. cities. Insuring a vehicle can be costly, especially if you're a new driver or insuring a luxury car, but it can save you tens of thousands of dollars in case of damage or theft.

The ideal car insurance company combines good coverage with reasonable rates and excellent customer service. Although cost matters when shopping for car insurance, it shouldn't be the only factor. You'll want to choose a company with a high customer satisfaction rating. That way, the process is smooth and hassle-free when you need to file a claim. At the same time, a good car insurance company will offer plenty of discounts to incentivize good customers. 

So what's the best car insurance company? That depends on a variety of factors. Below, CNBC Select breaks down the top car insurance companies into six main categories. (See our methodology for more information on how we chose the best car insurance companies.)

• Best overall: Geico
• Best for wide coverage: Nationwide
• Best for customer satisfaction: State Farm
• Best for discounts: Farmers Insurance
• Best for drivers with a DUI: Progressive
• Best for military members and veterans: USAA

Geico is the best car insurance company for affordable coverage, offering the lowest average premiums for both minimum and comprehensive coverage. It also enjoys a relatively high J.D. Power score for customer satisfaction, an A++ ranking from AM Best and an A+ rating from the Better Business Bureau (BBB). Finally, Geico has a wide range of insurance products, including homeowners insurance and renters insurance, that make it easy to bundle and save on coverage.

Average annual premium for minimum coverage: $373

Average annual premium for maximum coverage: $1,353

Nationwide offers one of the widest car insurance networks, with coverage available in 46 states plus the District of Columbia (all states except Alaska, Hawaii, Louisiana and Massachusetts). This is an important distinction because multiple companies competing for your business equals lower premiums. 

When it comes to coverage, Nationwide offers some of the lowest average car insurance rates for maximum coverage and some of the highest for minimum coverage. If you can bundle your insurance products and save on overall coverage, Nationwide could be a solid choice for you. 

Average annual premium for minimum coverage: $567

Average annual premium for maximum coverage: $1,422

According to the National Association of Insurance Commissioners (NAIC), State Farm is the largest auto insurance company in the U.S., based on market share. It enjoys the highest average J.D. Power score of the companies on this list, making it best-in-class for customer satisfaction.

State Farm caters to all types of drivers and offers some of the lowest full coverage auto insurance premiums around, while minimum coverage rates are squarely in the middle. State Farm enjoys an A++ rating from AM Best, indicating superior financial health. Beyond auto insurance, State Farm offers a wide range of other insurance products, so be sure to bundle whatever you can into your quote. You may be able to save money on the total cost of your policy. 

Average annual premium for minimum coverage: $464

Average annual premium for maximum coverage: $1,480

Every car insurance company offers various discounts to incentivize safe drivers, good students and customers insuring multiple vehicles. The more discounts that are offered, the higher your potential savings. Farmers Insurance offers 23 discounts on car insurance, which is the most of any company.

You can save money by enrolling in paperless billing, bundling other insurance products, paying premiums on time and other activities. Regardless of which company you insure your vehicle with, you should familiarize yourself with the various available discounts. With Farmers, you'll have more options than with other companies. 

Average annual premium for minimum coverage: $534

Average annual premium for maximum coverage: $1,598

Progressive is a top insurer for high-risk drivers, particularly for those with a DUI or DWI on their record. While high-risk drivers often pay higher insurance premiums than the average driver, Progressive generally offers lower rates for these types of drivers than other insurers. Its average full-coverage premium after a DUI or DWI is $2,049.

This insurer provides coverage in all 50 states and offers some useful features like an accident forgiveness program that can help drivers avoid a rate increase after an accident. However, Progressive falls a bit short when it comes to customer satisfaction ratings.

Average annual premium for minimum coverage: $553

Average annual premium for maximum coverage: $1,642

USAA stands out for enjoying high rankings on multiple factors. For starters, it offers the lowest average premiums. Equally important is customer satisfaction as no one wants to deal with a difficult customer service experience when filing a claim. Luckily, USAA enjoys the highest J.D. Power customer satisfaction scores, so you know you're "in good hands." 

The only catch? It's not available to everyone — only military members, veterans and their immediate family members are eligible for a USAA car insurance policy.

Average annual premium for minimum coverage: $371

Average annual premium for maximum coverage: $1,361

• How does car insurance work?
• What are the different types of car insurance coverage?
• How can I find the best price on car insurance?
• Can you get a refund on car insurance?
• Do car insurance companies check your credit?
• How do car insurance companies pay out claims?
• Who is considered a high-risk driver?
• What is the cheapest car insurance company?

Car insurance covers damage, theft and bodily injury in case of an accident. You pay a monthly (or bi-annual) premium based on the coverage and policy type needed. In case of an accident, you can file a claim and your insurance company will pay out damages based on various criteria. Filing claims can sometimes lead to higher premiums, so you'll want to do so cautiously. Car insurance companies offer lower premiums to drivers with clean records, as they're less likely to file damage claims. 

Car insurance has five main types of car insurance coverage you can incorporate into your policy. Each one offers varying degrees of protection in case of a loss. At a minimum, you will need liability coverage, which protects against damage and bodily injury. Depending on the level of protection you're looking for, you might want to add additional coverage to your policy. Here's a look at some of those options:

• Liability coverage: Basic coverage that is mandatory in most states. There are two types of liability coverage, protecting a policyholder against personal injuries (bodily injury liability) and property damage (property damage liability).
• Collision coverage: Covers repairs stemming from a collision with an object rather than another vehicle. 
• Comprehensive coverage: Protects your vehicle in case of damage caused by non-vehicular collision. Covered events include theft, weather-related damage and vandalism. 
• Personal injury protection: Pays your medical expenses and lost income from an accident. 
• Uninsured motorist coverage: Covers your vehicle against hit-and-run accidents.

You can find the best price for car insurance by requesting a quote directly from each insurance company's website. Some aggregators will pull car insurance quotes from multiple companies when you submit a single form.

By shopping around for car insurance, you can find a plan that works best for your budget and coverage needs. You can save money by bundling other products into your policy, such as homeowners insurance and renters insurance.

Car insurance is generally paid on either a monthly or bi-annual basis. If you've already paid your premium for the policy period and want to cancel it, you'll generally get a partial refund for the unused portion.

Your credit score will factor into your insurance premiums – a better credit score gets you a lower premium. Studies indicate that drivers with high credit scores are less likely to file claims than those with low credit scores. Car insurance companies check your driving and credit history to determine your liability risk. 

This inquiry is a "soft pull" that won't impact your credit score. Before applying for car insurance, you might want to check your credit score using a credit monitoring service such as Chase Credit Journey or CreditWise and take steps to improve your score to secure a lower car insurance premium.

In case of an accident, you can file a claim with your insurance company by calling the claims department. Major insurance companies have mobile apps that allow you to file a claim quickly and upload all the necessary documents in one place. 

Car insurance companies pay out claims after investigating and reviewing all related documents. Be sure to consult your policy for any limitations regarding your coverage. 

There are several reasons why a car insurance company could consider you a high-risk driver. You may be considered high-risk if you have a previous at-fault accident, a history of traffic violations, a DUI or have a large number of points on your license. In some cases, you may be required to file an SR-22 form.

You may also be considered a high-risk driver because of certain characteristics, such as if you're a young or inexperienced driver or have poor credit.

If your vehicle needs to be replaced, you'll likely receive a payout equaling its actual cash value (ACV), minus your deductible, or the amount you're responsible for paying before your insurance covers the rest. The ACV is a determined replacement value for your car (generally equal to the amount you'd have to pay to buy the same or similar model), minus depreciation. To get paid the price of a brand-new vehicle you'll need replacement coverage.

The three cheapest car insurance companies based on average annual premiums are USAA, Auto-Owners and Geico. However, car insurance rates can vary significantly depending on factors like your driving record, your credit profile and where you live. Rates can also vary by age, and the best car insurance for seniors might not be the best car insurance for a young driver, for example

You should shop around as the cheapest insurance company for you may differ.

Car insurance rates may vary considerably from one state to the next due to varying regulations and requirements. For instance, car insurance rates are typically higher in no-fault states such as Michigan and New York than other parts of the country. Below are the average car insurance costs by state.

Car insurance is an inevitable, costly expense for most Americans, and many companies compete for your business. Understanding how premiums are priced and requesting multiple quotes can save money while ensuring your vehicle is protected against damage and loss. Factor in customer satisfaction ratings and you'll increase your odds of being a happy customer if you ever have to file a claim.

To determine the best car insurance companies, CNBC Select analyzed dozens of U.S. insurance companies that come with policies to suit an array of needs.

When narrowing down and ranking the best car insurance companies, we focused on average cost, coverage, availability, ease of use and customer satisfaction using data from the National Association of Insurance Commissioners, AM Best, J.D. Power rankings and car insurance premium data from Bankrate.com.

The average annual premium data is based on a 40-year-old driver with a clean driving record and good credit. The driver insures a 2020 Toyota Camry, commutes five days a week and drives 12,000 miles annually, with 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

After reviewing the above features, we sorted our recommendations by best overall, best for wide coverage, best for customer satisfaction, best for discounts, best for drivers with a DUI and best for military members and veterans.

Note that the premiums and policy structures advertised for car insurance companies are subject to fluctuate in accordance with the company's policies.

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