Costco Auto Insurance: Is It Any Good?
Before we get into Costco auto insurance, here's some background. What we now know as the Costco Wholesale Corporation started out, in 1976, as The Price Club, the first members-only wholesale club to open in the U.S. Since then, wholesale mastermind Sol Price's first San Diego location has grown to include 559 brick-and-mortar stores in the U.S. and more than 200 outside the U.S. Costco has everything, from groceries and prescriptions to jewelry, furniture and carpet installation.
When it comes to insurance, Costco also sells auto and home policies and more. This article will tell you everything you need to know about Costco car insurance and how to beat their rates. Let's dive in!
Wait, What's Costco Auto Insurance?
Costco car insurance is only available to its members, but the deep-discount wholesale company does not write or underwrite any Costco car insurance policies. In fact, Costco offers its car insurance policies through a partnership with the insurer CONNECT, Powered by American Family Insurance.
Is American Family a Solid Company?
Yes, American Family started selling auto coverage in 1927, so the insurance provider is a longtime veteran of the insurance industry. Today, the Madison, Wis.-based company offers not only car insurance but also commercial, homeowner, health and life insurance. Yes, even life insurance! Bundling Costco auto insurance policies with other products is virtually the same as with every carrier and carries similar discounts.
Fitch Ratings recently awarded the $12.9 billion company an A+ (strong) rating for financial strength. American Family has 13,200 employees and comprises 14 companies, but only one of them, CONNECT, partners with Costco to offer auto coverage to the wholesale club's members.
Tell Me About CONNECT, Powered by American Family Insurance
Issaquah, Washington-based Costco used to partner with Ameriprise Auto Home Insurance to offer insurance policies to Costco members. When American Family Insurance bought Ameriprise Auto Home Insurance in 2019, American Family continued the company's partnership with Costco insurance but, in 2020, changed its new acquisition's name to CONNECT, Powered by American Family Insurance. So, CONNECT simply took up the Costco partnership where Ameriprise Auto Home Insurance left off.
CONNECT, Powered by American Family Insurance—catchy name, right?—now has more than 2,000 employees and offers products in more than 40 states. Besides auto coverage, the company provides home, condo, renter, umbrella and specialty insurance. Of course, all of CONNECT's policies are underwritten by American Family Insurance, the 13th-largest property-casualty insurance group in the U.S. and the No. 254 company on the Fortune 500 list.
(Note: De Pere, Wis.-based CONNECT, Powered by American Family should not be confused with the Mansfield, Texas-based insurer. They are two different companies.)
Well, Whatever Happened to Ameriprise Auto Home Insurance?
Ameriprise Auto Home Insurance no longer exists. It's gone, kaput.
It's kind of sad, but think of it this way: Without the chrysalis of Ameriprise Auto Home Insurance, the Costco policies through American Family Insurance would never have emerged. So, in a way, maybe Ameriprise Auto Home Insurance is still around, you know? Long live Ameriprise Auto Home Insurance!
Costco Car Insurance
Costco car insurance includes bodily injury, property damage, collision, comprehensive, no-fault, uninsured-motorist and guaranteed asset protection (GAP) coverage, among other products.
While rates vary from state to state and from person to person, Costco car insurance saves its customers at least 5% on their premium just for being Costco members. In fact, the company claims Costco auto insurance saves its members, on average, about $600 a year. If you're a member, compare the rate they offer you against auto insurance quotes from SmartFinancial.
Costco Car Insurance Liability Coverage
When purchasing car insurance, you should first find out your state's minimum liability requirements. Unlike Virginia and South Carolina, where it is possible to drive legally without car insurance, every other state requires its licensed drivers to carry at least three types of liability protection:
- Bodily injury coverage per person
- Bodily injury coverage per accident
- Property damage coverage
If you don't have these three types of liability protection, you cannot drive legally, even though you are a licensed driver. Moreover, if you were to drive without coverage, you would be leaving yourself open to unforeseen events that could severely compromise your financial strength.
Minimum Liability Varies by State
For each of these three categories—bodily injury per person, bodily injury per accident and property-damage coverage—your state requires its own minimum coverage amounts. For example, let's look at the difference between California's minimum auto coverage and Georgia's minimum auto coverage:
- $15,000 of per-person bodily injury coverage
- $30,000 of per-accident bodily injury coverage
- $5,000 of property-damage coverage
- $25,000 of per-person bodily injury coverage
- $50,000 of per-accident bodily injury coverage
- $100,000 of property-damage coverage
Wow, the property-damage minimum coverage is only $5,000 in California but a whopping $100,000 in Georgia. As you can see, minimum auto coverage will vary depending on your state. But no matter where you live, every car insurance company covers these three categories, and Costco auto coverage is no different.
But what does "$5,000 of property-damage coverage" really mean? When a California driver purchases their state-mandated minimum of property-damage coverage, that means their coverage will pay up to $5,000 for the property damages their car causes in an at-fault accident. Of course, even though California requires only $5,000 of property-damage coverage, California drivers could always purchase more, just to be safe.
How Do I Find the Cheapest Auto Insurance?
If you want to get the cheapest car insurance, you should buy your state's minimum liability coverage and only that—no collision, no comprehensive nor any other add-on coverage.
The next step is to comparison-shop rates from different companies. By comparing insurance companies and insurance quotes, you will get a much clearer idea of what coverage options are available within your budget. Of course, the more insurance companies you compare, the better because insurance quotes vary. You'll find the cheapest car insurance cost with access to online resources like SmartFinancial.
Use the Internet to Research Car Insurance
Every state's Division of Motor Vehicles website has a section on auto insurance that details the state-stipulated minimum motorist coverage as well as the various fines and penalties an uninsured driver can expect.
Every state also has an insurance department or division that acts as a watchdog to protect the consumer. The department's online site is a treasure trove of official statistics, legal information, tips and warnings. For instance, agents must be licensed by the state, so make your agent is licensed before you purchase a policy.
The Insurance Information Institute and the Better Business Bureau provide a great deal of information about auto insurance. While neither website compares insurance quotes, the BBB does offer many, many auto insurance reviews, based on customers' first-hand experience. While one customer's experience may differ from another customer's experience, it is interesting to note what the reviews have in common.
So, car insurance reviews are not to be overlooked when looking for a car insurance policy. If you shop around, you'll be in a better position to find a cheap car insurance policy. But, only use a trusted source like SmartFinancial, which offers their services free of charge, and beware if a site asks you to rifle through your credit cards.
Online Auto Insurance Reviews
Every customer should use the many sites devoted to car insurance reviews. If you want to conduct your own insurance review, these sites are great repositories of information.
Most of these comparison sites explain state-mandated coverage, add-on coverage options, discounts and the fines and penalties that result from an array of driver-related convictions. Do you questions about a specific topic, such as getting a student discount, roadside assistance coverage or, say, accident travel expense coverage? An agent can answer them if you get free insurance quotes. All you have to do is enter your zip code, fill out a brief questionnaire and provide your contact information. Voila! Within minutes, you can do your very own insurance review. There is no obligation to buy, so you can use these services to look at policy after policy after policy after policy—very, very quickly!
Why Do Insurance Rates Vary?
Insurance rates vary because each insurance company has it own formulas for calculating risk.
Coverage rates vary from individual to individual because every customer has their own particular circumstances that make them vulnerable to certain risks.
As Frank Sinatra once said, "A 25-year-old kid with a DUI and a sports car in downtown Brooklyn is gonna pay a higher rate for his auto insurance than a 55-year-old woman with a spotless driving record and a station wagon in Scarsdale. Am I right or am I right?"
Frank's right (even though he might not have ever actually said those words aloud): After all, Dean Martin's policy was written especially for Dino, and Sammy Davis Jr.'s policy was written especially for Sammy, just like your policy will be written for you, taking into consideration your particular coverage needs and individual circumstances.
Anyway, it pays to shop around. In an industry that has a 2021 U.S. market size of more than $310 billion, there are deals out there to be had.
SmartFinancial Takes the Guesswork out of Finding Auto Insurance
Founded in 2012, SmartFinancial uses artificial intelligence and machine learning to cut through mountains of raw data to find you the best—and cheapest—car insurance. In just minutes, SmartFinancial compares real-time quotes from every large and small car insurance company in your area. Then, SmartFinancial will match you up with the carrier that's best for you, your budget and your auto insurance needs. SmartFinancial will ensure that you get the right discounts when you bundle auto and home insurance policies.
SmartFinancial makes "shopping around" a whole lot easier. You can get free quotes right now just by entering your zip code here. If you would like to have a one-on-one consultation, just call 855-214-2291 to speak with a licensed SmartFinancial insurance agent.
Costco Auto Insurance Discounts
If you want to get the cheapest car insurance, you should not only purchase your state's mandated minimum liability insurance but also look into any and all discounts your carrier offers.
Insurance companies offer discounts. If you are a Costco member with Costco car insurance, there are an array of ways to save, including the following discounts:
- Good driver discount (California only)
- Good student discount
- College-degree discount
- Garaging discount
- Multi-car discount
- Home discount
Your Costco car insurance rate depends on many factors. For example, if you always park your car in a garage, your Costco auto coverage will probably be lower than if you always park your car in the street. Likewise, if you are s a insure more than one car with Costco car insurance, you may be eligible for a multi-car discount.
The following sections will explore specific discounts that are provided by Costco auto insurance. Later, we will explore Costco services that are available to every Costco member.
Costco Insurance Multi-policy Discounts
Costco gives its members three multi-policy coverage options. Each bundling discount is different, but each can save you money on your auto insurance, from month to month and year to year.
Bundle your auto and home insurance. You can get a lower rate if you own your own home or condo. If you purchase your auto-home insurance from Costco, Costco will lower your auto insurance rate.
Bundle your auto and umbrella insurance. Sometimes called "excess" insurance, umbrella insurance offers additional coverage beyond the limits of your auto, home, condo or renter policy. If you bundle your auto and umbrella insurance with Costco, you will get a lower car insurance rate.
Bundle your auto, home and umbrella insurance. If you bundle your insurance (Costco auto, home and umbrella insurance) with CONNECT you will qualify you for an even bigger discount.
Costco Premier Safety Discount
Costco rewards drivers with a clean driving history. So, if you and all the drivers on your Costco auto insurance have spotless driving records—no accidents, traffic violations or claims in the past four years—you should definitely ask about the Premier Safety discount.
Costco Defensive-Driver Discount
Another way to save money on your Costco auto insurance is to enroll in a defensive-driving course. When you take a defensive-driving course that's approved by your state Department of Motor Vehicles or an accredited organization, you'll get a discount on your Costco auto insurance.
However, this course must be a "refresher" course, meaning this discount doesn't apply to the driver-education courses you took while first learning to drive. Also, if you are thinking about taking a defensive-driving course from an accredited organization, check with your CONNECT, Powered by American Family Insurance agent to make sure CONNECT recognizes that organization.
To earn this safe-driving discount, just present your agent with a copy of your certificate of completion.
Costco Vehicle Safety Discounts
Your vehicle's safety features can lower your Costco auto insurance. In fact, a safety-feature discount is pretty easy to get. Costco may offer you additional discounts if your car has these safety features:
- Anti-lock brakes
- Air bags
- Automatic seatbelts
- Anti-theft devices
Some drivers may consider lowering their Costco auto insurance by buying a new car. Every year, the National Highway Traffic Safety Administration and the Insurance Institute for Highway Safety each release their own lists of the safest new cars. So, check out their 2020 or 2021 lists before heading over to the car lot.
We are living in a golden age of auto safety devices, so look for back-up cameras, forward-collision warning, lane-departure warning, adaptive headlights, blind-spot detection and other new safety features.
Costco Student-Away Discount
If a student on your policy lives on a campus more than 100 miles from your home, you may be eligible for Costco's student-away discount. This discount acknowledges that your car won't be driven by your student driver unless they are at home on the odd weekend or during a school break. Because they are driving less, you won't pay the full cost of a driver who is driving your vehicle every day.
However, this discount does not apply if your student has their own car at school.
Costco Tenure Discount
The longer you purchase your car insurance from Costco, the cheaper your car insurance will be. That is, when you reach certain milestones, the tenure discount repays your loyalty by charging you less than a new customer for the same or similar insurance.
Special Benefits for Costco Executive Members
To become a member of the Costco wholesale club, you must pay the required $60 fee. If Costco members pay an additional $60, those Costco members can join the club's executive membership tier, which provides special benefits for Costco executive members. For just that extra $60 per year, executive members who have Costco car insurance are automatically entitled to three benefits:
- Free towing
- Emergency roadside assistance
If your tire goes flat, your battery goes dead or your tank runs out of gas, roadside assistance will cover up to $75 for every roadside event for every vehicle on your Costco car insurance. (Roadside assistance does not cover the cost of a new battery, nor does roadside assistance cover gas, oil, coolant and other fluids.)
- Lifetime renewability
Most Costco executive members will receive lifetime renewability for their auto insurance policy. For example, if you have an accident or even more than one accident, you not be dropped from your Costco auto insurance policy. Certain exclusions apply, so ask your agent.
Costco's Full Coverage Insurance
While only purchasing your state's mandated minimum car insurance is the surest way to get the cheapest car insurance, it may not be the cheapest in the long run. For example, the minimum insurance probably won't cover severe losses in the event of a catastrophic event, so many drivers choose to purchase a higher amount of bodily injury and property-damage coverage than the state requires.
But bodily injury and property-damage insurance does not pay the cost of any damages to your very own vehicle. That's where full coverage insurance comes in.
Why Get Full Coverage Insurance?
Costco car insurance includes full coverage insurance, which comprises collision and comprehensive insurance.
Collision insurance pays for any damage that's caused when your car hits something (for example, a tree).
Comprehensive insurance pays for any damage that's caused when something hits your car (for example, a tree that falls on your vehicle during a storm).
When you consider that one headlight could cost up to $700 to replace and one car door could cost up to $1,500 to replace, full coverage makes a lot of financial sense. And those prices don't include labor and installation!
According to SmartFinancial's figures, the average cost of liability-only insurance in Alabama is $59.10 per month. On the other hand, the average cost of full coverage in Alabama is $107.67—just $48.57 more than liability alone.
So, Alabama drivers could get full coverage for only $582.84 more a year on average.
Other Costco Insurance Products
Through CONNECT, Costco offers other types of insurance. Ask your licensed insurance agent about these add-on insurance options.
Coverage for uninsured or underinsured drivers According to the Insurance Information Institute, 12.6% of motorists did not have car insurance in 2019, which is about one in eight drivers. Costco's uninsured-underinsured coverage pays when the at-fault driver has no insurance or not enough insurance.
Coverage for a rental car If you can't use your vehicle because of an accident, this Costco insurance will pay for a rental car until your car is repaired. Rental car insurance can come in handy!
Coverage for medical expenses If you get injured in an accident, this Costco insurance will help to pay for your medical expenses.
Coverage for personal injury protection (PIP) While Costco insurance for medical expenses pays for your medical bills, personal injury protection covers other associated health costs and takes into account any lost wages you or your passengers suffer after an accident.
- Guaranteed Asset Protection (GAP Insurance) Costco GAP insurance pays the difference between the amount of your car loan and the market value of the car itself. According the Insurance Information Instutitute, you should consider GAP in the following situations:
- You made a down payment of less than 20%
- Your vehicle is financed for 60 months or longer
- Your vehicle is leased
- Your vehicle's value is depreciating faster than the average vehicle
- You rolled over negative equity from an old car loan into a new car loan
SmartFinancial Can Compare Costco Auto Insurance Rates with Other Carriers' Rates
Comparison shopping for auto insurance coverage can be a time-consuming hassle. Every auto insurance company has different rates and options for car insurance coverage, so the number of choices can be bewildering. While SmartFinancial does not work with Costco, you can compare their rates with the 200+ insurers SmartFinancial partners with.
Let SmartFinancial make your life easier. You can get free quotes right now just by entering your zip code below. If you would like to have a one-on-one consultation, just call 855-214-2291 to speak with a licensed SmartFinancial insurance agent.
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