Geico vs. State Farm: Which One Is Right for You?

Fran
Adam Grossbart
March 31, 2021

Geico and State Farm are two of the best-known auto-insurance providers in the United States. We see their droll, giggle-inducing advertisements everywhere because both companies are, in fact, everywhere: Both companies write auto-insurance policies in all 50 states and Canada. And since Geico and State Farm are among the four largest auto-insurance carriers—together, the four account for 40 percent of the U.S. auto-insurance industry—both companies probably have a policy that fits your budget and needs.

Before deciding between Geico and State Farm, we'll have to compare each company's auto insurance packages, their features, restrictions, prices and discounts. Note: Our evaluations are based on averages, which means individual driver rates will vary with each insurer. For example, a 60-year-old female driver with a spotless driving record in rural Alabama will not have the same rate as a 25-year-old male driver with one at-fault collision in downtown Chicago. SmartFinancial can match you with the insurer that offers what you need at the lowest price.

Geico and State Farm: Some Similarities  

While Geico and State Farm write policies in all 50 states, the two auto-insurance behemoths are similar in other ways, too. For example, in a recent study by J.D. Power, a U.S. data analytics and consumer intelligence company, Geico and State Farm both received an overall auto-claims satisfaction score of 3.5 out of 5. Not only that, the Better Business Bureau gave both companies an A+ rating, and Consumer Reports gave each an overall score of 89 out of 100.

The insurance industry is worth about $300 billion, so it's easy to see why major players such as Geico and State Farm can back up a claim.

State Farm and Geico each offer a wide range of insurance packages—from car, RV, mobile-home, motorcycle and travel-trailer coverage to business insurance products to life insurance—and both firms allow you to bundle your policies for a multi-policy discount. They also both offer roadside assistance, including jump-starting a dead battery, flat-tire changes, lockout services and towing. A SmartFinancial agent can help you make the right decision on which insurance package will best fit your specific requirements.

An Overview: Geico

Founded in 1936 and now a wholly owned subsidiary of Berkshire Hathaway, Chevy Chase, Md.-based Geico is the second-largest auto-insurance company in the U.S. As such, the firm possesses a wide range of auto-insurance options and discounts. Further, Geico delivers a great interactive mobile experience, which includes a parking locator, a gas-station locator, a Lyft integration app and car-maintenance alerts. While Geico customers report a top-rated purchasing experience, the company uses a direct-to-consumer sales model that limits its access to local agents, and some policies are underwritten by third parties. Be warned: The firm offers no gap insurance, but you can always purchase that insurance from another provider as a standalone policy.

An Overview: State Farm

Founded in 1922 and ranked No. 36 on the 2019 Fortune 500 list, State Farm is the largest auto-insurance company in the U.S. The insurance firm boasts better-than-average customer service and employs 19,000 agents, two facts that are surely not unconnected. State Farm has excellent coverage for rideshare drivers and a plethora of available add-ons. For example, in some instances, you can purchase an add-on, or extra coverage, for your car's parts! On the downside, the Bloomington, Ill.-headquartered insurance agency offers fewer discounts compared to similar providers and, on average, higher-than-average premiums. While State Farm does not offer gap insurance, its Payoff Protector feature may fit the bill for some buyers.

Which Company Offers Cheaper Auto Insurance Coverage?

If you're shopping based on price alone, it's hard to beat Geico, which offers policies that are a couple of hundred dollars cheaper, on average, than State Farm's. Geico's rates are less expensive due to the company's many discounts. Further, if you are a driver with a poor record or have a DUI or been involved in only a minor accident, Geico's prices beat State Farm's every time; in fact, if you are a poor driver or have a DUI or experienced a little fender-bender, you could save more with Geico.

Now, let's compare the two companies' prices based on a hypothetical customer who wants to buy "basic coverage" auto insurance. While every state has its own mandatory car-insurance requirements, all basic coverage includes at least three liabilities: bodily injury, property damage and uninsured driver. Our two test-case policies go beyond those three liabilities but still offer the same coverage protections: 

  • Bodily injury liability
  • Property damage liability
  • Personal injury protection
  • Uninsured motorists bodily injury
  • Comprehensive ($500 deductible)
  • Collision ($500 deductible)

For this basic coverage, our hypothetical customer would pay State Farm about $1,500 in one policy period, but the same customer would pay Geico significantly less for the same period. Of course, policies can vary widely from individual to individual, state to state and multi-policy to multi-policy. A partner of both Geico and State Farm, SmartFinancial has insurance experts who would be happy to walk you through your options to find the policy that satisfies your individual circumstances. There is no fee for a quote, so click on the link or give us a call 855-214-2291.

Geico's Discounts

Geico has more discounts than State Farm—that's why its prices are lower, on average. (To beat Geico's pricing, you might have to look at smaller insurance companies, which SmartFinancial partners with too.) Geico has established the following discounts, among others:

  • New vehicle
  • Good student
  • Multiple policies
  • Multiple vehicles
  • Anti-theft devices
  • Anti-lock brake system
  • Air bags
  • Vehicle safety features
  • Good driver
  • Defensive driver
  • Affinity membership alum
  • Military

State Farm's Discounts

Geico has more discounts than State Farm, but State Farm's discounts are solid. For example, the company's Drive Safe & Save program adds up discounts based on telematics—for example, a driver's smartphone or OnStar services—so the safer you drive, the more discounts you'll receive. Also, the firm's Steer Clear program can save money for drivers under 25 years old, if they haven't had any at-fault accidents or moving violations in the past three years. State Farm recognizes the following discounts, among others:
New vehicle
  • Good student
  • Multiple policies
  • Multiple vehicles
  • Anti-theft devices
  • Air bags
  • Vehicle safety features
  • Good driver
  • Defensive driver
  • Student away at school
  • Driver training
  • Affinity membership alum
  • Telematics
  • Annual mileage

What Factors Do State Farm and Geico Use to Determine Rates?

Each insurance company has its own intricate algorithm to determine risk. Unless you live in a certain state (California, Hawaii, Massachusetts, Michigan), both insurers will likely look at your credit score, which reflects your history of paying bills on time. While the three major credit bureaus—Equifax, TransUnion and Experian—use different scoring models, the credit-score tiers generally break down like this:

  • 300 to 579 Very poor
  • 580 to 669 Fair
  • 670 to 739 Good
  • 740 to 799 Very good
  • 800 to 850 Exceptional

A driver with poor credit may choose to go with Geico, as the company can save you some money over State Farm's price, all variables being equal. 

But when assessing risk, insurance companies consider more than just an individual's credit rating. Other factors include a customer's age and driving record. When comparing Geico's and State Farm's prices for the same coverage based on age, Geico edges out the competition. If you are a teen driver, you may pay more annually for a State Farm policy than a Geico policy. People in their 20s or 30s can save more on average with Geico's coverage, as opposed to State Farm's. And if you are in your 40s and 50s, you might pay less a month with Geico than with State Farm. Again, it's important to note that these savings will no doubt vary. For instance, a customer may get a lower quote from State Farm, depending on the customer's full risk profile and the discounts for which he or she is eligible. That's why it's wise to compare rates. 

Geico vs. State Farm: A Recap

Geico and State Farm have been insurance-industry giants for a long time. While one company might be a perfect fit for one customer, the other company might be the best possible option for you. At SmartFinancial, you can get a quote for free—all you have to do is enter your zip code below!

Both companies offer basic coverage for any state, a range of add-ons and multi-policy discounts. While Geico has lower rates on average and provides excellent internet-mobile and purchasing experiences, State Farm has great coverage for rideshare drivers and the customer service that comes with almost 20,000 in-the-field agents. Whichever company you choose, don't skimp on liability insurance. Choosing an insurance company and an auto-insurance policy can be a daunting task, but SmartFinancial's seasoned industry pros will help you every step of the way through the maze of competing insurers.

Get a Free Auto Insurance Quote Online Now.

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