Do discount companies offer the best deals on car insurance?

Discount car insurance companies offer lower rates with limited coverage options. Before purchasing discount car insurance, evaluate your coverage needs, and compare multiple companies.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jul 22, 2021

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Here's what you need to know...

  • Discount car insurance companies typically only offer coverage when you drive your own personal vehicle
  • Though rates with these companies may be low, the coverage may not offer you the best options
  • Be sure to shop around and receive multiple quotes before committing to any company for insurance coverage

If you watch television at all, you are probably aware of the vast number of discount auto insurance companies that are offering insurance today.

However, if you are looking for car insurance, the cost of the insurance should not be the only factor in making a decision about what car insurance company to choose.

Enter your zip code and receive affordable car insurance quotes from multiple companies for FREE!

Best Coverage for Your Needs

Before buying car insurance, consider not only how much coverage you should carry, but what types of coverage and what other additional services you might want as well.

Not all car insurance is equal. Before shopping for car insurance, it is important to honestly evaluate your insurance needs.

For instance, you may need coverage for rental cars if you travel frequently and do not have this type of coverage available with your credit card company.

Some companies also include additional services such as roadside assistance as part of their policies.

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Types of Coverage


The most common forms of auto insurance coverage include:

Liability Coverage – Liability covers damage to another person’s car or property if you hit them. It does not cover damage to your own car, however.

Most states require you to carry at least a minimum amount of liability coverage in order to drive legally, although the amount of liability coverage required varies.

Liability coverage also covers you in any car you drive, whether or not you own it, as long as you are driving it with the owner’s permission.

A deductible is applied to liability coverage and must be paid before any benefit payments are made for a claim.

Bodily Injury Coverage – Bodily injury coverage comes into play if you are in an accident and injuries result.

It does not cover your own injuries, but it covers injuries to passengers in the car with you or to injuries that occur in another party’s vehicle. This coverage pays for

  • medical bills
  • hospital bills
  • rehabilitation
  • lost work time
  • legal costs
  • pain and suffering penalties applied by a court

Comprehensive CoverageComprehensive coverage applies to any damage that is the result of anything other than an accident.

For example, it covers damage that may occur to your vehicle as the result of a storm or from hitting an animal. It also covers vandalism and theft damage.

Collision Coverage – Collision coverage applies to any damage that may occur if your vehicle is in an accident.

This can include everything from hitting another car, to hitting a building to damage that may occur from an overturn. Collision coverage also can apply if your car is damaged beyond the value of the car and is totaled.

However, keep in mind that the reimbursement from a totaled car will only be for the current value of the car, not for the amount of money you owe on the car.

Gap Coverage – If your car is totaled and it is financed, you may want to have gap insurance coverage. Gap coverage is applied when you receive a reimbursement for the current value of the car that is less than you owe.

The insurance will pay the remaining amount, or gap, to your lender. You will need some tips to finding the right gap policy.

Personal Injury Protection Coverage – Also known as “PIP,” personal injury protection coverage is mandatory in some states. Unlike bodily injury coverage, it covers you and anyone named on your policy.

Additionally, it provides coverage for you and anyone else named on your policy when driving someone else’s vehicle.

Often, it is considered a compliment to bodily injury coverage because it pays up to 80 percent of costs associated with funeral costs, rehabilitation and lost wages.

Underinsured or Uninsured Driver CoverageUnderinsured driver coverage applies when you are in an accident with a driver who only carries the state minimum coverage and they are at fault in the accident.

Often, the damage costs are much higher than the minimum required costs. Underinsured driver coverage will pay for medical expenses, property damage and lost wages.

Also, some policies will provide coverage for a rental car until repairs are completed on your vehicle.

Discounts Available

It is common for discount car insurance companies to only provide coverage for your car.

When looking for car insurance, also consider what other types of insurance you may need. For example, do you also need rental insurance, life insurance or homeowners insurance?

If you have other types of insurance policies, ask if discounts are offered for multiple policies.

You may also want to ask about good student discounts if you are planning on having a student included on your policy.

You might be surprised to find that once you add your teenager to your policy, your rate may increase substantially.

Other types of discounts to ask about include lower rates if you are over the age of 60, discounts for anti-theft devices, good driver discounts, and multiple vehicle discounts.

You may also find companies that offer discounts for use of winter tires and storing your vehicle in a secured parking lot.

Comparison Shop


When choosing auto insurance, take the time to comparison shop. Make sure that you are looking at the same types and amounts of coverage when you look at different policies.

However, do not be surprised if you receive very little detail about what is provided in the policy through discount sites.

You can also contact various auto insurance companies directly to get information about prices and policy coverage.

Most companies have websites through which you can get basic information.

Also, consider contacting them over the telephone and talking to a customer service representative for detailed information.

Finally, you can work with an individual insurance broker. Often, brokers represent multiple auto insurance carriers and can provide you with information about the best insurance coverage for your needs.

It is a smart idea to evaluate your auto insurance coverage annually around renewal time.

While discount auto insurance companies may appear to be a good deal on the surface, you should do some homework and ask for detailed information before agreeing to any coverage.

Consider not only the premium price but also what type of coverage you need and any additional services that might be included with the auto insurance policy.

To receive multiple car insurance quotes for FREE, enter your zip code below.

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