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Finance

The Most Profitable Auto Insurance Companies and Why

The Most Profitable Auto Insurance Companies and Why 1

Insurance companies generate profits from premiums paid by consumers. Also, they get extra income by reinvesting this money into other profit-making assets.

That said, about 17 million vehicles are sold in the U.S. every year. And because every car owner has to buy an insurance cover, you can see why auto insurance companies are the most profitable.AQ

Remember, top auto insurance companies offer varying premium prices and services. And reviews of Progressive insurance show that every big company has its unique selling point to attract potential consumers.

Most Profitable Car Insurance Companies

Before we go into greater detail, here is a quick list of the most profitable auto insurance companies.

Rank Company Premiums Written (billions) Market share (%) Best known for
1. State Farm $40.4 16 Big agent network
2. Geico $33.9 14 Digital experience
3. Progressive $33.2 13 Many discount options
4. Allstate $25.9 10 Higher-risk drivers
5. USAA $15.8 6 Military auto insurance
6. Farmers $12.2 5 Many coverage options
7. Liberty Mutual $11.8 5 Many discount options
8. Nationwide $5.8 2 Specialty policy features
9. American Family $5.2 2 Bundling options
10. Travelers $4.9 2 Oldest insurance company

State Farm

Founded a century ago, State Farm is the most profitable auto insurance in the country. It has the biggest market share and the most written premiums.

State Farm has over 19,000 agents and 60,000 employees across the country. Plus, you can access the company’s services through its website or apps. With such a wide outreach, the company has gained popularity, especially among youths.

The company offers more options like:

  • Emergency roadside assistance.
  • Rideshare driver coverage.
  • Rental cover reimbursement.

This company also offers great discounts. For example, you can save up to 25 percent if you are a teenage driver with a GPA of 3.0 or higher.

State Farm’s customer satisfaction may be another contributing factor to its high profits. You can reach the company 24/7 through its website, app, agents, or customer care. And apart from quality services, it has superior financial ratings.

Allstate

This company may have higher premiums, but it has carved a niche. Allstate is one of the few companies that insure higher-risk drivers. It also has higher claims satisfaction ratings when compared to most companies.

Allstate also has many agents across the country. Today, they have about 46,000 employees. Plus, the company has specialty coverages that most top insurance companies don’t offer.

These include:

  • Custom sound equipment.
  • Classic cars.
  • Rideshare insurance.

But, Allstate customer satisfaction ratings are below average, according to JD Power. Still, you may get excellent discounts that offset the higher premium rates.

Progressive Insurance

Like Allstate, Progressive offers competitive rates to drivers with accident records. They also offer all the basic auto insurance coverages.

Other coverage options include:

  • Car rental reimbursement.
  • Loan payoff.
  • Roadside assistance.
  • Medical expenses.

Progressive is better known for its Name Your Price feature. This feature allows you the most control over your premium price. Here, the company only asks for basic information and the amount you can pay. You will then get policy options that fit your budget.

Progressive Insurance also offers several discounts that help you save more. Snapshot safe driver, for example, is an excellent discount feature.

The company also has strong financial ratings, which offers customers security. But, according to JD Power ratings, its customer satisfaction is below average.

Geico

This company is quite profitable since it insures more than 24 million vehicles. And with its nine regional offices, it has about 9,000 employees countrywide.

Geico offers one of the most affordable insurance coverages in the country.

Besides affordable prices, Geico is popular because of its user-friendly mobile app. This mobile app has over 3 million reviews in Apple’s App store (scoring 4.8 out of 5). The app’s top features allow consumers to access their digital insurance cards, ask for roadside assistance, and more.

On top of basic coverage options, Geico also offers other options, which include:

  • Personal injury protection.
  • Uninsured/underinsured motorist.
  • Medical payments.

Also, Geico’s customer satisfaction is above average according to JD Power ratings. So, it’s no surprise it’s one of the biggest auto insurance companies.

USAA

USAA has an intriguing history. In 1922, 25 army officers came together and decided to insure each other’s cars. A century later, the company insures millions of military personnel and their families.

USAA is well-known for giving its members competitive rates. So, if you have an immediate family member in the military, it’s a good option.

The company also has several coverage options like:

  • Roadside assistance.
  • Car replacement assistance coverage.
  • Rental reimbursement.
  • Accident forgiveness.
  • Comprehensive and collision insurance.

Besides excellent features, USAA has the best customer satisfaction rating. And according to NAIC, it also has very low complaint rates.

The only downside is the company’s strict military membership. Plus, its website and app are less impressive than other top auto insurance companies.

Liberty Mutual

Liberty Mutual has also been around for over a century. Today it is among the most profitable companies with its market share of 5.6 percent. Also, this global company operates in 17 countries.

The company offers various insurance coverage options. Besides its basic options, other options include

  • Roadside assistance.
  • Gap coverage.
  • Collision.
  • Liberty Mutual Deductible Fund (deductibles reduce over time).

Liberty Mutual also offers more discount options than most auto insurance companies. First, the moment you apply for your quote online, you get a 12 percent discount. Other discount options cover safe driving, paperless statements, and good grades for students.

This company ticks several boxes, but its customer satisfaction ratings are below average.

Farmers Insurance

Farmers is another company with an interesting history. It was founded in 1928 as an auto insurance company for farmers’ vehicles. Today, it is the 7th most profitable company.

Apart from the basic coverage options, it also offers options such as:

  • Roadside assistance.
  • Rideshare coverage.
  • Extended equipment coverage.

Most insurance companies offer these extra options. However, Farmers is different from other companies in two ways. First, it gives essential workers a premium reduction. And next, it offers vehicle insurance discounts for active-duty military personnel, veterans, and honorably discharged members.

Travelers

Travelers Insurance is among the oldest insurance companies around. In fact, it has been operating as an auto insurance company since 1897.

Today, the company has about 13,500 agents and more than 30,000 employees in several countries.

Travelers Insurance offers all the basic insurance coverages and more. One of its best discount options is IntelliDrive. Here, you can reduce your rates through safe driving. Join IntelliDrive, and you can reduce your rates by about 20 percent if you drive safely throughout the year.

American Family

Like Farmers, American Family started as an insurance company for farmers. Later, it expanded and began including non-farmers. Today, the company is the ninth most profitable auto insurance company. It also has fewer complaints than other big companies in its category.

This company offers all the basic insurance coverage options. On top of that, they have other options, including:

  • Gap insurance.
  • Accidental death or dismemberment coverage.
  • Ridesharing insurance.
  • Accident forgiveness coverage.

American Family also has various discount options to help you save. For example, it offers bundling discount options for combining car and house insurance.

The biggest downside is that the company is only available in 17 states.

Nationwide

Nationwide is mostly known for its On Your Side Review. This insurance assessment plan encourages you to make changes every year. Here, the company may guide you to policy options that work best for your needs.

Of course, you can review your policy at any time. But these reminders may help you assess your coverage options to save in the future.

The company also offers special options, which include:

  • Accident forgiveness.
  • Total loss deductible waiver.
  • Gap coverage.

Nationwide has below-average consumer satisfaction ratings. However, it has a Superior financial rating with A.M.

Final Thoughts

It is not easy to choose an auto insurance company based on profitability. Yes, the financial stability of profitable auto insurers attracts more customers. But, as we have seen, most big companies have below-average customer satisfaction.

Also, every company has some feature(s) that propels it to the top. So, it may be a question of which features attract you most. For example, a company can have an average mobile app but affordable rates.

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