Should You Get Your Auto Insurance From Costco?

Proving once and for all that you can find all at Costco, the big-box retailer indeed offers exclusive auto insurance to its loyal members.

The company promises a range of exclusive discounts and benefits, saving drivers hundreds of dollars a year.

But while Costco can be trusted to deliver great deals on everything from printing paper to product, it’s fair to ask if a discount club is the best place to buy such critical protection.

For some club members, Costco auto insurance might really be the more affordable option, but they can end up paying for it in other ways.

How Costco Auto Insurance Works

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Costco members in most states can lock in discount auto insurance policies at the big box store. The key word here is through.

Costco does not directly issue insurance policies. Instead, policies are underwritten by American Family Insurance under the CONNECT brand.

American Family, previously known as Ameriprise Auto & Home Insurance, has provided insurance to Costco members for almost 20 years.

In addition to auto insurance coverage, CONNECT offers home, tenant, specialty and umbrella insurance.

Quotes are available on Costco’s website or by phone.

And it seems that many people accept these quotes. Costco says more than 400,000 of its members have switched their auto insurance to CONNECT.

What is included in Costco auto insurance

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Although Costco markets the product as a cheaper alternative, CONNECT still offers the standard coverage options that drivers expect from their insurance company.

This includes third party liability, collision and comprehensive coverage as well as medical coverage and injury protection.

Up front, Costco members get a discount “just for [their] affinity with Costco ”- although the size of this discount is not mentioned.

And like other insurers, CONNECT offers a range of discounts for things like driving safely; take a driving course; install safety devices such as anti-theft devices and airbags; overnight parking in a garage; to be a good student; insure multiple cars or combine with home or umbrella insurance and be a long-term customer.

Policies purchased through Costco also unlock a few additional perks, such as:

  • Windshield repair. Policyholders can claim chip repairs (but not replacements) without having to pay the deductible.

  • Roadside assistance for members of the executive. Up to $ 75 in coverage, not including the cost of a battery or fluids.

  • Renewable for life for executive members. Outside of Michigan and Maryland, any policyholder who has never had a major traffic violation or has not paid their premium can be assured that Costco will not cancel their policy for accidents or incidents. minor offenses.

The Benefits of Costco Auto Insurance

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The main selling point of this insurance product is its affordability.

Costco boasts that its members saved an average of $ 581.89 in the first year they switched to CONNECT. And a few independent surveys confirm the idea that it’s generally cheaper than the big national insurance companies.

However, it’s important to note (as Costco does in the fine print on its site) that not everyone will see such savings. Some will see no savings at all.

When it comes to insurance, the amount each insured pays depends on a wide variety of factors, including their credit rating, marital status, level of education and postal code. And each business weighs these factors differently.

That being said, most of the customers who have remained loyal to the company appear to be happy with the coverage and pricing of CONNECT policies. Costco says 89% of policyholders said they were very satisfied in a 2019 survey.

And you shouldn’t have to worry about the company’s ability to pay your claim. It is rated “A” by credit agency AM Best, which means it is financially sound, stable and its operational performance is solid.

The Cons of Costco Auto Insurance

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Even if the price makes you smile, the difficulty of making a claim might leave you grumbling.

The National Association of Insurance Commissioners, which helps regulate the industry and protect consumers, maintains a customer service index based on the number of complaints a business receives for its size.

The baseline is 1.0, so a company with a rating of 2.0 received double the number of complaints you might expect.

Last year, American Family Insurance received a score of 6.31 from the NAIC, meaning it received over six times the average number of complaints for an insurer of its size.

On top of that, American Family does insurance the old fashioned way, which means it doesn’t offer users an app to file claims or contact customer support. Although you can report some losses online, you will usually need to initiate the claims process over the phone.

Even though this seems like an acceptable compromise, you might not be able to take advantage of it.

CONNECT says it doesn’t do business in Alaska, Louisiana, North Dakota, Wyoming, Maine, Rhode Island, or West Virginia. Costco adds that insurance products cannot be “obtained” through the company in New York. And Massachusetts drivers must be executive members to qualify for the exclusive Costco discount.

What is the right choice?

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If you’re already an executive member of Costco, there’s a good chance that getting your auto insurance through the Discount Club could save you a lot of money.

But if you’re worried about customer service – and adding more complaints to the stack at American Family – it’s worth exploring a few other options. After all, big box shopping isn’t the only way to get a big discount.

For example: Many states allow insurers to use your credit information to assess your risk as a driver. If your credit isn’t there, consider taking the time to increase your score and see if that results in better rates.

One of the easiest ways to improve your credit score is to deal with any problematic debt that you have from month to month.

Finally, the most effective way to reduce your premiums is to simply seek better rates. As mentioned earlier, even though insurers look at the same information to establish a premium, they all use their own calculations.

That’s why the Insurance Information Institute recommends comparing at least three quotes before choosing the right deal for you. You can also use the same trick with home insurance, if only to make sure you don’t pay too much.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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