Discover the Best Car Insurance Companies for Financed Cars in 2022

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Jeffrey Johnson graduated summa cum laude from the University of Baltimore School of Law and has worked in legal offices and nonprofits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman University and worked in film, education, and publishing. His professional writing has appeared on sites like The Manifest and Vice, and he is the author of a novel ...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: May 11, 2022

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Key Takeaways

  • USAA offers the cheapest coverage for a financed car
  • Financed vehicles require full coverage
  • You can combine discounts to lower your rates

Are you looking for the best affordable car insurance companies for financed cars? Cheap car insurance is available for financed vehicles. However, you’ll need full coverage until you pay off the loan.

Learning more about the best car insurance companies for financed cars will help you get the most affordable coverage.

Before learning about the best car insurance companies for financed cars, enter your ZIP code to get free auto insurance quotes in your area.

How much is coverage from the best car insurance companies for financed cars?

What are the 10 best insurance companies, and do they have the best financed car coverage? The answer depends on what’s most important to you. For many people, the cost is the most critical factor.

There is no financial difference between insuring a financed car and a vehicle that you own. However, your lender will likely require that you obtain full coverage. This requirement can increase your rates, especially if you’ve previously had minimal coverage.

Comparing the difference between full and minimum coverage will help you determine how much more you’ll pay. The following chart shows the average annual full and minimum car insurance rates from the most popular auto insurance companies.

Average Full Coverage and Minimum Coverage Rates from the Best Car Insurance Companies for Financed Cars
CompanyAverage Annual Full Coverage RatesAverage Annual Minimum Coverage Rates
Allstate$2,381$656
American National$1,432$495
Farmers$1,830$477
GEICO$1,268$380
Progressive$1,562$550
State Farm$1,491$489
Travelers$1,464$526
USAA$1,169$759
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As you can see, full coverage costs significantly more than minimum coverage. This increase is because companies base car insurance rates partially on the amount of coverage, and full coverage protects drivers in far more ways than minimum coverage.

When comparing these well-known companies, you’ll see that USAA has the cheapest car insurance for full coverage. However, USAA only provides coverage to military members, veterans, and their immediate families.

For non-military members, the best car insurance rates for financed cars are from GEICO. The company also is the most affordable overall for minimum coverage.

What are some smaller car insurance companies for financed cars?

Many people only consider the most popular car insurance companies, but sometimes smaller companies can provide cheaper rates. Many of these companies also offer coverage to customers nationwide.

While these companies aren’t as well known as their larger competitors, some smaller auto insurance companies to consider include:

  • Erie Insurance
  • North Carolina Farm Bureau
  • Direct Auto
  • The General
  • Auto-Owners Insurance
  • Esurance

When looking at the best car insurance companies’ quotes for financed cars, make sure to include all companies to find the cheapest rates.

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What insurance coverage do you need for financed cars?

As previously mentioned, a financed car will usually require full coverage. The bank or lender that provided you with the loan has a financial interest in your car. Therefore, they want to protect their investment.

While most states only require minimal coverage for liability, full coverage protects the vehicle from multiple types of damage. Since the loaner likely doesn’t know if you can afford to pay for repairs or pay off the loan if the car is a total loss, insurance offers protection for everyone.

Full coverage car insurance generally includes:

  • Liability coverage
  • Comprehensive
  • Collision
  • Uninsured/underinsured motorist
  • Any additional state-specific requirements

In addition to these coverages, you might also want to consider Guaranteed Asset Protection (GAP) insurance. This coverage is not a part of a full-coverage plan but pays the difference between what the car is currently worth and the balance still owed on the vehicle.

GAP insurance protects the borrower if the repair cost exceeds the car’s value, resulting in the total loss of the vehicle. The coverage is especially beneficial if you still owe a significant amount on the loan.

Can you get liability-only car insurance for financed cars?

If you’re concerned with the cost of full coverage car insurance, you might wonder if there’s any way that you can get liability only. Most states only expect that drivers carry liability insurance, but the lender will likely require that you have full coverage.

However, you only need to keep your full coverage until you pay off your car. If you want to decrease your coverage once you complete your payments, you can do so. But full coverage provides much more protection, so you should consider keeping the plan.

Before you decide, make sure you understand what liability insurance covers. Liability pays for property damage and injuries to other people when you’re at fault for an accident.

On average, liability coverage is about 51% cheaper than full coverage due to the lack of protection to your person or vehicle. But it leaves the insured vulnerable to other expenses.

What happens if you don’t maintain the required coverage?

When you finance a car, you sign an agreement that includes your payment and insurance requirements. The bank holds the title until you pay it off, at which point they’ll give it to you.

While the bank  has a stake in the car, they can require you to carry a certain amount of coverage. If you don’t maintain the necessary coverage, the bank can force-place insurance. This means they take out an expensive policy that protects only their interests, and they charge you for it.

However, the bank can only do this you make the final payment, after which you only have to maintain the minimum coverage required by the state.

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What discounts are available on car insurance for financed cars?

The Insurance Information Institute says that several factors determine your car insurance rates. Unfortunately, for some people, these factors can add up to expensive auto insurance. However, discounts will help make your coverage more affordable.

As previously mentioned, full coverage insurance can be expensive. But when you’re looking to buy car insurance, there are several ways to save. You can find the lowest rates by taking advantage of discounts.

Insurance companies offer a lot of different discounts for things like vehicle safety mechanisms, safe driving, and bundling insurance policies. Here’s a look at some of the most common discounts from the best car insurance companies.

Car Insurance Companies Discounts for Financed Cars
Car DiscountDiscount Eligibility
Accident-freeDrivers with no accidents in the past three to five years.
Anti-lock brakesCars with factory-installed anti-lock brakes.
Anti-theftCars include anti-theft devices, like alarms, tracking systems, and kill switches.
Defensive drivingCompleted approved defensive driving course.
Good studentHigh school or college students with at least a 3.0 grade point average.
HomeownerInsured owns a single-family home.
Low mileageDriving 5,000 to 15,000 miles per year.
Multi-car policyInsure more than one car on a single auto insurance policy.
Multi-policyBundling different types of insurance.
Paid in fullPolicy is paid in one payment.
Safe driverDisplay safe driving habits, like having passengers wear seat belts, low driving speeds, and less aggressive driving.
Student away at schoolCollege-aged children that attend college over 100 miles away and leave their car at home.
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While these are the most common discounts from car insurance companies, other savings are available. Asking about possible deals when speaking with companies will help you find the lowest car insurance rates.

What are some other ways to save on car insurance for a financed car?

The easiest way to lower your car insurance rates is to add discounts. However, there are some other ways that you can save on your coverage. These additional saving opportunities include:

  • Change your deductible: A higher deductible puts more of the financial burden on you in a claim, so the company reduces your rates in return.
  • Improve your credit score: Customers with higher credit scores are more likely to make payments.
  • Consider monitoring system: Some insurance companies will provide a discount for installing a gadget in the car that monitors speed, driving habits, and mileage.

Choosing less coverage isn’t recommended. Instead, it would be best if you considered all car insurance companies to find the cheapest coverage.

How do I file a claim on a financed car?

When filing a claim after an accident, the first step is to contact your insurance company and inform them that you need to file a claim. The company will require certain information before it can begin the process. This information includes your:

  • Name
  • Address
  • Policy number
  • Police report
  • Photos of damage
  • Copy of medical bills
  • Estimate for repairs

The first thing you should do after getting into an accident is call 911. Your second action should be to call your insurance company.

Before the police arrive, take photos of your vehicle. If you live in an at-fault state, law enforcement officers will examine to scene to determine who is at fault for the accident. Make sure to request a police report that you can provide to your insurance company.

How do car insurance deductibles work for financed cars?

If you’re at fault for an accident, you’ll have to pay a collision deductible. If the other driver is at fault, their insurance company will pay for bodily injury or property damage expenses.

When filing your claim, you’ll need to provide repair estimates and medical bills. Once the insurance company has received everything, they’ll process your claim check. All of the money can be sent to you or a portion forwarded directly to the repair shops and healthcare centers.

Best Car Insurance Companies for Financed Cars: The Bottom Line

The most popular car insurance companies provide coverage for financed cars, but you might find cheaper rates from smaller companies. You’ll likely require full coverage while you pay off your loan, so you’ll need to compare rates for a policy that includes comprehensive and collision.

Comparing the best car insurance companies for financed cars will help you find the cheapest full coverage option.

Now that you know about the best car insurance companies for financed cars, enter your ZIP code to find free auto insurance rates in your area.

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Enter your zip code below to view companies that have cheap auto insurance rates.

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