Does Geico really have the cheapest car insurance?



Myles Ma

Myles Ma

Senior Managing Editor

Myles Ma is a health care expert & personal finance writer for Policygenius. He edits the Easy Money newsletter.

Published November 7, 2017|2 min read

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Everyone knows the Geico slogan. You probably hear it in your head right now. Geico car insurance seems like it's the cheapest around. When I got quotes to insure a Tesla, Geico gave me the lowest prices.

Geico has made its name on price, but is it actually the cheapest? Here's a look at whether that's the case and what, other than price, you should consider when shopping for car insurance.

What goes into the cost of car insurance?

A number of factors determine car insurance rates, said Jesse Contreras, director of personal lines for CoverHound. They include age, commute, location, driving record and credit score. In general, rates go down each time you renew your policy, with the biggest drop happening at age 25.

The longer your commute, the more you're likely to pay. If you live in a more congested, accident-prone area, that will drive up rates, too. If you have a bad driving history, prepare to pay more. And your credit score can also affect rates, since insurers use it to determine how likely you are to pay your premiums on time.

"While Geico does offer low rates, there are other carriers that are just as competitive, if not lower," Contreras said. A lot depends on your needs and where you live.

How Geico offers low rates

Geico manages to offer some of the cheapest car insurance rates because the company has one of the lowest operating costs in the industry, said Brian Sullivan, editor of Risk Information, which publishes analysis of the auto insurance marketplace. Geico has a smaller network of insurance agents than other big insurers and focuses on keeping costs low, Sullivan said.

"The real difference is in very efficient marketing and operating costs," he said.

While Geico's gecko and slogan may be burned into your subconscious, that doesn't necessarily mean they're your best choice for a car insurer, Contreras said. You shouldn't choose a car insurer based on TV ads. Instead, look at a company's claims and customer satisfaction history.

Picking an insurer based on price may also lead to bare-bones coverage, he said.

"If the consumer is looking for the cheapest insurance rate, they're going to get the minimum coverage plan," Contreras said.

When shopping for car insurance, make sure your policy covers what you need and what your state requires. A policy that costs more in premiums may also provide more coverage for medical bills, vehicle repair or replacement and liability for others in the event of an accident. The saying "you get what you pay for" also applies to insurance, Contreras said.

When you know what you need covered, make sure to get multiple quotes. Contreras recommended contacting an insurance agency to get advice based on your specific needs and lifestyle.

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Image: boggy22

Senior Managing Editor

Myles Ma

Senior Managing Editor

Myles Ma is a health care expert & personal finance writer for Policygenius. He edits the Easy Money newsletter.