Is Auto Insurance Cheaper Through Costco?
Last Updated on July 7, 2022
Costco now offers car insurance through CONNECT (powered by American Family Insurance). Through CONNECT, Costco’s auto insurance partner, Costco members reportedly saved on average of $583.60 on their annual home and auto insurance premiums. Today, we’re explaining everything you need to know about Costco’s car insurance, including whether or not Costco auto insurance is cheaper than your current provider’s.
What Is Costco Car Insurance? How Does Costco Car Insurance Work?
Costco does not technically sell car insurance. However, Costco members can get discounts on homeowners, auto, and umbrella insurance policies offered by CONNECT (a subsidiary of American Family). In the past, Costco offer insurance products through Ameriprise Insurance. Ameriprise, however, was acquired by American Family in 2019 and rebranded as CONNECT by AmFam.
According to Costco, the average American adult can save up to $575 by taking advantage of these discounts.
CONNECT car insurance policies come with extra benefits for Costco members like roadside assistance and lifetime renewability.
That’s all good – but is auto insurance really cheaper through Costco? Or are you paying a similar price to what’s offered by other major insurance companies? Let’s take a closer look.
How Much Does Costco Car Insurance Cost?
Costco car insurance is typically $500 to $600 per year cheaper than similar car insurance options from competing companies.
The average car insurance policy in the United States is around $900 to $1,100.
The average Costco car insurance policy (offered by CONNECT) is priced at $500 to $650.
As with any car insurance comparisons, rates vary widely depending on your geographic location, driving record, credit score, and countless other factors. Generally, however, Costco car insurance is significantly cheaper than competing options in your area.
Other Benefits of Costco Car Insurance
Costco car insurance is cheaper than most competitors. However, it also comes with other benefits, including:
All Costco members are eligible for free roadside assistance on all CONNECT by AmFam insurance plans. If you are stranded on the side of the road due to a flat tire, dead battery, or vehicle lockout, then you will be compensated up to $75 per incident. This $75 does not cover the cost of a battery or fluids (like gas, oil, or coolant), although it can cover towing, tire changes, and vehicle unlocking.
Costco Executive Members are eligible for lifetime renewability with their American Family car insurance. Lifetime renewability guarantees that your coverage will not be dropped after an accident.
There are certain limitations and exclusions to this lifetime renewability. It’s not available to:
- Residents of Maryland or Michigan
- Drivers with “major violations” on their record
- Drivers who fail to pay their premiums
- Drivers who fail to provide requested documentation
- Drivers who move to a state in which American Family is not available
- Drivers who purchase a vehicle that cannot be insured
How Much Does a Costco Membership Cost?
Up above, we concluded that the average Costco car insurance policy is around $500 to $650 per year, which is significantly cheaper than most competitors.
However, you need to factor the cost of a Costco membership into these savings. There are four different Costco membership options available.
Costco Membership Options:
Gold Star: $60 per year
Gold Star Executive: $120 per year
Business: $60 per year
Business Executive: $120 per year
The basic $60 per year plan provides access to all Costco stores, with one card available per household. Gold Star Executive offers 2% off eligible Costco and Costco travel purchases as well as extra benefits on select Costco services.
All Costco members are eligible for Costco car insurance through American Family. Only Costco Executive Members, however, qualify for American Family’s lifetime renewability bonus.
Is American Family a Good Car Insurance Company?
Remember: Costco does not technically sell car insurance. Instead, Costco members can get discounts on American Family car insurance.
You don’t have to be a Costco member to get American Family car insurance. Most American Family policyholders are not Costco members.
Is American Family a good insurance company? Let’s take a look at some of the metrics.
American Family Auto Insurance Rankings and Ratings
First, American Family receives an average number of complaints to the National Association of Insurance Commissioners (NAIC) compared to similar insurance companies of its size. The NAIC complaint index for American Family is above average.
Second, American Family has a financial strength score of A+ or Superior from A.M. Best. That’s the second-highest rating available to car insurance companies. It indicates that American Family is in a strong financial position and should have no issue paying claims for policyholders.
Third, American Family isn’t a large enough insurance company to be listed on J.D. Power’s annual nationwide insurance rankings, which ranks the top 20 insurance companies in the United States by customer service and claims satisfaction.
However, American Family is listed on J.D. Power’s southwest subregion rankings. In the 2021 rankings, J.D. Power gave American Family 4/5 stars for overall satisfaction, making American Family the best insurance company in the subregion overall.
J.D. Power gave American Family 4 stars out of 5 for overall satisfaction, price, and billing process and 3 stars out of 5 for policy offerings, customer interaction, and claims satisfaction.
Overall, American Family is an above-average car insurance company. American Family isn’t usually the top-ranked car insurance company in any region, although it’s generally near the top.
What’s the Catch with Costco Car Insurance?
There isn’t really a ‘catch’ with Costco car insurance and CONNECT by American Family. American Family is an average car insurance company that offers the same basic coverage as other car insurance companies.
The only real ‘catch’ is that its car insurance isn’t available in all 50 states.
American Family only operates in the following 19 states: Arizona, Colorado, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Nevada, North Dakota, Ohio, Oregon, South Dakota, Utah, Washington, and Wisconsin
Final Word on Costco Car Insurance
Generally, Costco car insurance is one of the cheapest options available. Costco claims its members can save up to $575 by getting their homeowners, auto, and umbrella insurance policies through CONNECT by American Family Insurance.