Which Insurance Company Is Better – GEICO or State Farm?
Last Updated on July 24, 2020
State Farm and GEICO are the two largest auto insurance companies in the United States. What’s the difference between the two, and is one better than the other? Below, we’ll provide a full breakdown of each company and how it relates to you.
About State Farm
State Farm is the largest auto insurance company in the USA. It was founded in 1922 and is headquartered in Bloomington, Illinois. It’s also the 36th biggest corporation in the US by total revenue, which is at $87 billion.
State Farm has made a reputation as being in your neighborhood, and a lot of its advertisements are based on neighborly agents serving customers’ needs. Indeed, State Farm has over 18,000 agents in all 50 states, with 343 claims centers, 30 operations centers, and has nearly 57,000 employees.
Okay, so State Farm is a giant company. How does this affect their auto insurance?
Generally, customers of State Farm are happy with their company. Their rates are competitive, and the claims service is acceptable (sometimes exceptional, sometimes not).
With nearly 19,000 agents, State Farm literally is in about every neighborhood. This means that you’ll primarily be dealing with an agent and one office. How much interaction you’ll have with the agent varies with each agent’s model of doing business, but they will be the face of the company in each part of the country.
GEICO comes in at #2 in the largest auto insurance companies in the United States. It was founded in 1936 and its full name is the Government Employees Insurance Company, which reflects its original target market. GEICO’s HQ is in Chevy Chase, Maryland and is a subsidiary company of Berkshire Hathaway.
There’s a big revenue gap between #1 and #2, with GEICO’s $25 billion annual revenue being a cool $62 billion less than State Farms.
GEICO is famous for its advertisements, with the two most famous being the gecko and the caveman. The company spends over $1 billion each year on advertising.
Unlike State Farm’s emphasis on having a neighborhood agent, GEICO is primarily a phone-based and web-based insurance company. There are GEICO agents and offices, but only in select states and cities.
State Farm vs. GEICO – Target Markets
With their different approach to advertising and how they sell new business, GEICO and State Farm don’t go after the same driving segment. State Farm gears its new business more towards families with multiple vehicles, while GEICO gears its new business towards younger drivers and millennials.
That’s not to say that if you are a younger driver that GEICO will automatically be more competitive. In fact, many discounts that State Farm offers are geared towards younger drivers.
There are many different factors that go into your rates with any company, making it worthwhile to get quotes from both companies.
State Farm vs. GEICO Comparison
Both companies offer many of the same discounts, but there are some differences that could push one or the other in your favor.
Both GEICO and State Farm offer big discounts for having multiple vehicles insured. State Farm’s discount is 20%, while GEICO comes in at 25%.
Good Student Discount
Both companies offer better-than-average discounts for having good students on the policy. State Farm’s is 25% while GEICO’s is 15%.
Edge: State Farm
Good Driver Discount
If you’ve maintained a clean driving record over the last 5 years, GEICO offers a good driver discount of up to 26% on your premiums. State Farm only looks back 3 years, but offers less of a discount, at 10%, for a clean 3-year record.
State Farm offers homeowners, renters, farm, and commercial, as well as life insurance policies that can all be packaged into a discount of up to 17%. GEICO offers these policies as well but doesn’t underwrite the policies. This means that they’ve contracted with 3rd party insurance companies to write other lines of business. The discount amount is based upon the type of policy written.
Edge: State Farm
Both companies offer strong claims for customer service but take different approaches. State Farm heavily leans on its local agents. Some agents will be better than others at serving your needs. GEICO offers a 24-hour live-agent telephone line that offers comprehensive analysis over the phone, as well as a robust online resource center and mobile app.
GEICO has stayed true to its original market and offers various discounts to service members. For active and former military members, it offers a 15% discount. If you’ve served overseas in Iraq or Afghanistan, it offers a 25% discount. For any federal employee, GEICO offers an 8% discount.
Roadside Assistance Program
Both GEICO and State Farm offer roadside assistance programs as auto insurance policy add-ons. State Farm’s 24-hour Emergency Roadside Service costs around $40 annually to add on to your policy. It offers the usual roadside services like fuel delivery, winching/extraction, battery jumpstarts, towing, and locksmith services. GEICO’s Emergency Roadside Assistance starts at just $14 annually and includes the same basic services that State Farm offers. Both programs are high-quality and very affordable, but GEICO wins this one because of the slight price difference.
Telematics is increasingly being used by insurance companies to reward safe driving. Telematics keeps track of certain aspects of your daily driving habits over a period of about 3 months. It then gives you a discount if you drive safely, but it won’t penalize you if you don’t.
State Farm’s telematics program is called Drive Safe & Save. Drivers get an automatic 5% discount just for trying it out, and anywhere between a 5% and 50% discount off each vehicle’s premium that uses it.
GEICO just recently released its usage-based program, DriveEasy. The jury is still out as to whether or not it helps drivers save money. GEICO does give a rather easy-to-earn discount for wearing a seatbelt, though. The GEICO Seatbelt discount awards 15% off your Medical Payments or Personal Injury Protection premium.
Edge: State Farm
Final Verdict – GEICO vs. State Farm
Both State Farm and GEICO have millions of happy customers who are loyal to their company and happy with their products, services, and advertising. State Farm might be a better fit for families that have multiple insurance policies and young drivers on their policy, while GEICO is definitely a good choice for military members and veterans, as well as people who have clean driving records and many vehicles on their policy.
Both companies are great at what they do, which is why they are the #1 and #2 auto insurance companies in the country.