Vehicle Insurance

Should You Purchase Costco Car Insurance? Review, Benefits

To demonstrate once and for all that it is possible to purchase anything at Costco, the big-box retailer now provides its loyal customers with access to exclusive Costco Car Insurance
The company guarantees drivers access to a wide variety of discounts and benefits, which have the potential to save them hundreds of dollars each year.

However, despite the fact that Costco can be relied upon to provide great deals on a wide variety of items, from printer paper to produce, it is reasonable to question whether or not a discount club is the best place to purchase such essential protection.

Although purchasing Costco Car Insurance might appear to be the most cost-effective choice for some club members, those customers could wind up spending more money in other areas.

Should You Purchase Costco Car Insurance

What Exactly Is Costco Car Insurance?

Members of Costco in the majority of states are eligible for reduced rates on Costco Car Insurance policies purchased through the big-box store. Through is the essential word in this context.

There is no direct relationship between Costco and the provision of insurance policies. Instead, American Family Insurance, under the brand name Connect, is the insurer that is responsible for underwriting the policies.

Since almost twenty years ago, American Family Insurance, which was formerly known as Ameriprise Auto & Home Insurance, has been providing Costco members with insurance coverage.

In addition to providing coverage for automobiles, Connect also provides coverage for homes, renters, specialty items, and umbrellas.

You can get a quote from Costco by calling them or looking it up on their website.

It would appear that a significant number of people are making use of the company’s offers to reduce prices. According to Costco, more than 400,000 of its members have made the transition to Connect for their Costco Car Insurance needs.

What Aspects Are Covered In Costco Car Insurance?

Connect continues to provide drivers with the standard coverage options that they would anticipate receiving from their insurance provider despite the fact that Costco markets the product as a more affordable alternative.

This consists of medical coverage and personal injury protection in addition to liability coverage, collision coverage, and comprehensive coverage.

Costco members are eligible for a discount “simply for [their] affinity to Costco,” although the specific amount of this discount is not specified at the time of purchase.

And just like other insurance companies, Connect offers a variety of Car insurance discounts for things such as safe driving, taking a driver’s education course, installing safety features such as anti-theft devices and airbags, parking overnight in a garage, maintaining a good grade point average, insuring multiple cars or bundling with home or umbrella insurance, and being a loyal customer for a long period of time.

Purchasing insurance through Costco grants access to a number of additional benefits, including the following:

Repair of the windshield Chips is covered by the policy, so policyholders can make a claim for repairs without having to pay the deductible.

Assistance on the side of the road for executive members Coverage of up to $75, but the cost of a battery or fluids is not included in this total.

Executive positions are eligible for renewal in perpetuity. Outside of the states of Michigan and Maryland, policyholders who have never been convicted of a serious traffic offense or have fallen behind on their premium payments need not worry about having their coverage canceled by Costco due to minor infractions or accidents.

Should You Purchase Costco Car Insurance

Costco Car Insurance Advantages 

The fact that this insurance product is reasonably priced is one of its most compelling selling points.

Costco brags that its customers who switched to Connect for the first time in their first year of membership saved an average of $583.60. In addition, the results of a few separate surveys lend credence to the idea that it is, on average, more affordable than the large national insurance providers.

It is essential to keep in mind, however, that not everyone will see savings of this magnitude. There will be some people who won’t see any savings at all.

When it comes to insurance, the premium that each policyholder is required to pay is determined by a large number of factors, some of which are the policyholder’s credit score, marital status, level of education, and ZIP code. And the weight that each company gives to each of these aspects varies.

Having said that, the vast majority of Connect policyholders who have remained loyal to the company appear to be pleased with both the coverage and the prices of their policies. According to a survey conducted in 2021, nearly nine out of ten Costco members renew their policy each year.

You also shouldn’t need to be concerned about the company’s ability to pay the claim they’ve accepted. The credit rating agency A.M. Best has given it a “A” rating, which indicates that it is financially robust, stable, and that its operational performance is satisfactory.

Costco Car Insurance Disadvantages 

Even if the price makes you happy, you might end up being irritated because it is so difficult to make a claim on the policy.

The National Association of Insurance Commissioners, an organisation that contributes to the regulation of the industry and works to protect consumers, keeps a customer service index that is based on the number of complaints received by a company relative to its size.

Given that 1.0 serves as the benchmark, a business with a rating of 2.0 has received twice the number of customer complaints that one might anticipate.

In 2020, the National Association of Insurance Commissioners (NAIC) assigned the American Family  Connect Insurance Company a rating of 6.31, which indicated that the company had more than six times the typical number of complaints for an insurer of its size. The previous year, that score was raised to a 2.15 rating.

During this time, the affiliated American Family Connect Property and Casualty Insurance Company was awarded ratings of 3.0 or higher.

On top of that, American Family provides insurance in the traditional manner, which means that it does not provide its customers with an app that they can use to file claims or get in touch with customer support. In most cases, you will be required to start the claims process by calling in, despite the fact that some losses can be reported electronically.

Even if you think that is a reasonable compromise, there is a possibility that you won’t be able to take advantage of it.

Connect has stated that it does not conduct business in the states of Maine, Rhode Island, North Dakota, Wyoming, Alaska, or Louisiana. In addition, Costco clarifies that its customers in the state of New York cannot “obtain” insurance products through the retailer. In addition, in order to qualify for the special Costco discount, Massachusetts drivers need to be executive members.

Is Costco Car Insurance Worth It?

If you are already a member of the executive tier of Costco’s membership program, there is a good chance that purchasing your Costco Car Insurance through the warehouse club will result in significant cost savings.

However, if you are concerned about customer service and adding more complaints to the pile that American Family already has, it is in your best interest to investigate some alternative choices. After all, shopping at big-box stores isn’t the only way to get a significant price reduction.

For instance, many states permit insurance companies to use information from your credit report when determining the level of risk you present as a driver. If your credit is less than perfect, you might want to think about spending some time improving it to see if that helps you qualify for better interest rates.

Dealing with any burdensome debt that you are currently carrying from month to month is one of the simplest ways to make improvements to your credit score.

Last but not least, the easiest and most effective method for lowering your premiums is to search around for better rates. Although all insurers consider the same information when determining a premium, each company uses its own methodology to arrive at that premium. This was discussed earlier.

Because of this, the Insurance Information Institute advises consumers to compare at least three different offers before selecting the policy that best suits their needs.

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