Is using a small car insurance company a good option?

Small car insurance companies often offer personal customer service and specialty policies that large companies can't match, but it usually comes with a slightly higher price tag.

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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® Joel Ohman

UPDATED: May 4, 2022

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Here's what you need to know...

  • Small insurance companies can be a good option, depending on your car insurance needs
  • The smaller companies can offer one-on-one service and specialty coverage that the larger companies don’t carry
  • Whether small insurance is a good option for you depends on your individual insurance needs

When you’re shopping for car insurance, your first instinct is to go to an insurer you’ve heard of.

You have a tendency to just pick up the phone and call one of those insurance companies that run nationwide television commercials and see what they have for you.

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Certainly, there are a lot of upsides to calling one of the big companies, and there’s really nothing wrong with this approach. People who buy their policies from major providers like Geico and Nationwide do so for a number of reasons.


Small insurance companies don’t typically receive an A+ rating from A.M. Best.

You don’t get to be one of the safest and most secure insurance companies around without earning billions of dollars in revenue, and that’s something that the small companies simply cannot match.

For many drivers, the conversation ends right there. When you buy insurance, you do need some degree of security.

For people who want to make absolutely certain that their insurance policy will be honored, a big insurer certainly does have more money to throw around.

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24-Hour Service

Many large insurers can afford to keep people on the phone 24 hours a day, 7 days a week so that customers always have somebody to speak with.

Small insurance companies are often made up of fewer people and simply cannot offer that kind of around-the-clock service.

This might be a problem if one of your main concerns is excellent customer service.


Larger companies usually have a variety of options for contacting them and making a claim from the website to email to toll-free numbers.

Smaller companies rarely have as many options as large companies when it comes to contacting them, buying a policy, and making claims.

If these three factors are of the utmost importance to you, then there’s certainly no reason not to go with a large insurer. However, small insurance companies have plenty of positives as well.

Specialty Insurance

If you need insurance in a highly specialized field such as specific types of commercial trucking then you might not have any choice but to go with a small insurer.

When you are looking for specialty car insurance, chances are you’re going to find a small insurance company that caters to you.

Larger insurance companies generally offer a wide range of policies, but they can’t afford to cover everything.

If you’re an individual with bad credit looking to insure a three wheeler or if you’re a hobbyist looking to insure a custom-built vehicle, the larger insurers simply cannot afford to set up a whole office of experts devoted solely to your area of auto insurance.

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In many industries, larger companies can offer more competitive rates because they have access to greater resources and a wider customer base.

Insurance is a business where the small guy has a shot at staying competitive with his pricing.

In fact, if you’re only looking for minimal coverage, then chances are you’re going to wind up getting the very best quotes from smaller insurers who stay competitive in order to give themselves an advantage over the big names.

These cheap policies may not always be robust, but small companies have less overhead, fewer employees and can usually afford to charge less for small policies.

Personal Attention

If you call Geico 12 times, you’ll probably talk to 12 different people.

With a small insurer, you may wind up on a first-name basis with the person you hand your monthly check to. This personal service is at the root of the small insurance company.

A small insurer cannot offer the same policies as the larger insurers, they don’t have national advertising and they can’t cover everything from motorcycles and four wheelers to RVs and boats, but they can offer something that a big insurer can’t, and that’s personalized attention.

Big or Small: Finding the Company That’s Right for You

If none of the points listed above have helped you choose, keep both large and small companies in the running when you go looking for car insurance.

The fact of the matter is that large companies have a lot of advantages over small companies and small companies have a lot of advantages over large companies. Both offer their own appeal to a different type of driver.

It should become clearer which side of the fence you fall on as you compare prices and options.

At the very least, by searching through both large and small insurance companies for the very best policies and prices, you’re guaranteed to find the provider who best suits your needs.

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The Bottom Line

For readers who only want a simple answer, here it is: Yes, small car insurance companies are a great option.

But they’re not perfect for everybody.

Somebody who is insuring a fleet of commercial vehicles is probably better off looking for an insurance provider who can easily cover such a large order while somebody insuring a specialty vehicle is better off looking to the personalized attention offered by a small insurance provider.

There’s no reason to put either side out of the running, as they both offer their own unique advantages and disadvantages.

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