Have you ever been to Costco just to grab the jumbo cheese and bag of organic peppers, you manage to come out with a head full of information about their car insurance and $ 300 in things you had not planned to buy!  Sounds familiar?
You may be thinking, hey, Costco is known for its great deals, I bet the insurance is no different. Even if you are not completely wrong – it is generally a good deal for many people – there are definitely things to watch out for.
What is Costco Auto Discount?
Like most items purchased through Costco homeowners, Costco Life Insurance and Costco Car Insurance are offered to members at a discount. Costco does not actually do the insurance itself but cooperates with CONNECT of American Family Insurance.
Does Costco Have Good Car Insurance Deals? CONNECT has competitive prices on its own, but purchases through Costco save an additional 5-1
Executive Costco members also receive benefits such as free roadside assistance and towing, up to $ 75 per event. You also get a lifetime renewal, which means they will always renew your policy, no matter how many violations or accidents you may have over the years. Of course, restrictions apply. For example, this is not available to those living in Michigan or Maryland. This does not apply to anyone with major violations already, or if you do not pay your insurance premiums. They will not extend the lifetime renewal if you buy a car that is uninsured or if you can not provide the documentation they need. But for most people, this is an advantage that gives peace of mind.
With all that said, there are some disadvantages that you may want to weigh their offers against. Let's dig into 5 things to be aware of when deciding if Costco insurance is right for you. they offer insurance in varies. It is not found in Alaska, Wyoming, North Dakota, Louisiana, Maine and Rhode Island. In Tennessee, you can buy insurance through Costco, but you do not get any discounts by doing so. And in Massachusetts, insurance is offered only to those who pay the level of Executive membership. the price in half, while others said they had modest savings, enough to cover their Costco membership.
It seems that the prices are based on where you live, with some places being significantly cheaper than others, and others not offering it at all. If you are planning an upcoming move, be sure to check if you are still covered by the country you are moving to.
Expect them to raise their rates after the first year
As with most insurance companies, the rates offered in the first year are attractive, but often do not remain so. Some complaints against Costco Insurance claim disproportionate interest rate increases after the first year . Several claimed that their interest rates doubled in the second year of the policy.
Whether the rate hike you receive is too high or not is based on many factors, but be prepared to shop after the first year to make sure you still get the best price for your current situation.
Poor Customer Service
As we discussed, Costco does not provide the insurance, CONNECT by American Family Insurance. And it has poor customer service, especially in relation to delays and settlement amounts.
American Family Insurance, the company that takes out Costco Auto Insurance, has 1.14 / 5 stars on the Better Business Bureau ( BBB ) website.
We also found that the complaints index according to the National Association of Insurance Commissioners was 3.98 for 2019 (data from recent years are available). This means that they had almost 3 times more complaints than the national average .
In addition to customer complaints, customer service hours are very limited, which you might not have had if you bought directly from CONNECT. Costco lists its opening hours from Monday to Friday at 08:00 to 23:00. Eastern Time, 9:30 a.m. to 8:00 p.m. Eastern Time on Saturday, and no hours on Sunday, as they are closed. It is far from the round the clock that many other companies offer.
Entitlement does not receive a 2% membership reward
As a Costco member, you are probably used to receiving offers. If you have a leading membership, you have earned a membership reward of 2% on all your purchases. However, the premiums you pay for car insurance are paid to CONNECT and are therefore not entitled to a 2% membership reward .
While you still save 5-10% of the regular premium price you bought through CONNECT directly, it's still a little disappointing that it does not contribute to the cashback program, especially when other extra services, such as Travel, Count on.
Cost savings versus quality coverage
Do you really want the cheapest you can find? It usually costs coverage. If the answer is yes, it's just fine. We are all different and have different needs. Some people prefer to pay out of pocket for most repairs and stay out of the system as much as possible. But for many people, it does not cost to cover the quality regardless of their personal situation. There is an advantage, up to a point, in being protected in the event of a major loss .
Buying the cheapest insurance is not always the best, especially if the savings on your premium cost you not being properly covered or sufficient for your personal situation in the event of an accident.
Costco is known for providing good quality with good value, which is why knowledgeable people shop there and would be attracted by the car insurance offered by them. But it is not always the best coverage . Ensuring that you have adequate coverage for yourself including affordable deductibles, falls on your shoulders. Doing your due diligence, especially when prices seem like a steal, is paramount.
For example, the company that takes out Costco car insurance is CONNECT of American Family Insurance. AFI acquired The General, a non-standard insurance company, which means that they only take high-risk drivers. They will take drivers with really good risk portfolios, the ones that are perfect for everyone, and they will give you a really good deal, but you are gathered with all the high-risk people. This usually leads to offers of lowball claims and direct rejections of claims – which is one of the most important complaints we see from CONNECT.
Doing the research yourself is the key. You know what you need, so make sure it matches the rate you will pay. What should you ask yourself?
- Does it have everything I need to cover myself enough?
- Is the lowest possible price that includes everything I need?
- Are the customers' ratings decent – good, without any red flags in these ratings?
For some, Costco car insurance will tick all of these boxes. For others, it will be elsewhere.
The car insurance offered by Costco, taken out by CONNECT of American Family Insurance, is likely to save money on your premiums. It may even be best for you and your special circumstances. The above reasons are why you should be careful, the things you should look for and ask yourself before changing. Because this is about you, your life and what is the best balance for you. As always, with insurance, it is best to shop. You can be sure that there is a policy out there that suits you perfectly, even if it may not come with the jumbo cheese and the bag of organic peppers.
* While doing our utmost to keep our site up to date, please be aware that "current" information on this site, such as quotation estimates or relevant company information, may only be accurate from the last day of editing. Huntley Wealth & Insurance Services and its representatives do not provide legal or tax advice. Please contact your own legal or tax advisor.