Auto Insurance

How Many Car Insurance Companies Do You Have to Shop At To Get the Best Deal?

Thinking about shopping around for car insurance? You should! It may save you lots of money over time—here's how to start.

When it comes to car insurance, it pays (cheaply) to compare as many companies as you can. A recent study we conducted found that the average major city has at least 14 car insurance companies all willing to give you their business. Between those fourteen companies, prices could fluctuate by hundreds, if not thousands of dollars per year. Pricing insurance is difficult, and not every company is able to offer a competitive price in every city. Even in our analysis of 2,900 cities, GEICO was the first cheapest in 32% of them, but it was also the fourth or worst cheapest in 35% of them. You will never know if you are getting the best price unless you look. So how likely are you to getting a great deal based on your current shopping habits?

If You Look at Only Two Companies in Your Area

What if you thought only looking at two companies in your area was enough to get a good deal? After all, you probably know names like GEICO and Allstate, odds are one of them has to have the best deal. To see if two companies was enough, we ran a simulation in ten major cities in the U.S. and found that there was a 89.7% chance of finding a deal below that city's average price for car insurance. Admittedly, the odds are pretty good. Most people should feel pretty secure with an nearly 90% chance of something happening. Still though, are you content with just average? In those cities, the average price was still 1.5x to 2x greater than the absolute cheapest price. There are still great deals to be had. So what’s the likelihood of getting one of the top five deals in those cities?

City

Chance of Finding a Top Five Cheapest Company

Baltimore

42%

San Diego

39%

Chicago

38%

Miami

38%

Los Angeles

36%

San Antonio

35%

Dallas

34%

Columbus

34%

Boston

34%

New York

29%

Detroit

28%

Average

35%

For a top five deal, your chances drops to 35% from 89% across the ten cities if you are only looking at two companies. A significant drop off. You are more likely to not find a top five deal, than you are finding one. How much lost savings could that translate to? In the case of car insurance in Boston, our sample 30 year old driver could potentially miss out on nearly $1,000 per year if he was unlucky enough to only check the two companies that were most expensive in the city.

So What’s the Magic Number for Finding the Best Deal?

Of course looking at every company in your area is one way to ensure you are getting the best deal. In cities like Chicago though, where there may be close to thirty companies, it may be difficult to get a quote from all of them. To give yourself a greater than a coin’s flip chance of getting the best deal, we found that you should check out at least 6 to 10 companies.

Number of Companies You Look AtChance of Finding The Best Deal

6

62%

8

76%

10

88%

With six companies, your odds are about 62% while they shoot up to 88% when you look at ten companies. Your odds only get better the more you look.

How Should You Compare Prices Between Companies?

Now that we have the magic number (range), you need to develop a good strategy that you can revisit every year to shop around for companies. The most obvious way is to simply look up “best car insurance” in your area. An easier way is to look at your states page, like here in California, for a definitive list of most or all of the companies available. The next step would be to file an online quote with the companies. Unfortunately, not every company (especially the smaller ones) have an online quote filing process. If you are really determined, you could go see an agent in person, or give them a call.

How We Got Our Numbers

The quotes for each city were taken for a sample 30 year old male driver who drives a 2011 Toyota Camry. To find the percentages for the cities, we ran a simulation 10,000 times that figured out what were your chances of finding a certain value in the city if you looked at a certain amount of companies. So for example, in Chicago there were 23 companies. In the case of finding a value below the average when looking at only two companies, we ran how often you would find that value out of a sample of 2 of the 23 companies in each of the 10,000 simulations.

Mark Fitzpatrick

Mark Fitzpatrick is a Research Analyst at ValuePenguin focused on the insurance industry. He previously worked in Country Risk Management at State Street Corporation.

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