Which Company is Cheaper for Auto Insurance Compared to Geico, All State and Others

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I’ve had my auto insurance with State Farm for the past few years, and every year their car insurance premiums have been going up. It was only a few dollars difference and I just ended up paying the higher rate. But when I recently received a new renewal notice, their premium had gone up by $150 or over 20%! This bought my 6 month (semi-annual) car insurance bill to $836, and this is after having a multi-policy discount with them. Upon receiving the mail I immediately picked up the phone and called the State Farm agent, who gave me the glib line that all companies are finding it difficult in the current economy and financial companies – especially insurance companies – had to raise fees to stay in business. A load of baloney if you ask me. Working in the financial services industry and as a regular personal finance blogger, I know a thing or to about market trends and insurance premiums are in fact falling as companies try and retain/attract customers.

So I exercised my consumer rights and shopped around online. I checked out two or three company websites and a couple of multi-provider insurance portals (like Esurance). Based on wanting cost-effective comprehensive insurance coverage that provides multi-policy discounts along with good customer service, my choices came down to GEICO and All State. Both these companies have been advertising heavily, claiming that they could save lots of money on car insurance. So I went to their web sites and submitted my personal and auto information to get insurance quotes. Here’s what I found:

GEICO

By far, GEICO have the easiest to use website, with guidance on key terms and coverage options along the way. After giving some personal information about where I live (all insurance is determined on this basis), I really liked their online feature that automatically obtained my vehicle and driver information from motor vehicle Get a GEICO Quote!departments and other groups. This allowed me to get a faster and more accurate quote, without having to type in all my car information. It took me around 5 minutes to get a premium estimate (broken down by each insurance item) that I could easily customize it to see what impacts changing one or more factors would have on the premium.

I tried about four variations and even after choosing a number of the higher-end options (like a low deductible and rental car insurance), that were better than my current policy, I ended up getting a quote for under $600. I then used this quote to call up my State Farm agent, and he said the best he could do was $710 (he “suddenly” found that he could drop $126 from the renewal notice amount!). I told him thanks, but no thanks, and that I will be taking my business elsewhere. It was also the inspiration for this article, so at least I owe him for that.

Before I get to my All State other insurance portals experience, it is worth noting a few of the key auto insurance coverage terms (based on definitions from the GEICO quotes I got). Most of these are pretty standard across providers and worth understanding when shopping around.

Bodily Injury Liability pays damages for people injured or killed in an accident for which you are legally responsible. It also covers your legal defense if you are sued as a result of an accident. Each selection shows two coverage limits (e.g. $100,000/$300,000 as I chose) – the first dollar amount represents the coverage limit for any one person; the second dollar amount represents the total coverage limit for one incident or accident. Individual states have different minimum requirements for liability insurance and for lease cars.

Property Damage Liability pays for damage to other people’s property resulting from an accident caused by your auto for which you are legally responsible. It also covers your legal defense if you are sued as a result of an accident. If the property damages are high, your assets — including your home, savings and future wages — may be at risk if you are under or not insured. If you lease a car, your lease contract will typically require you to maintain minimum Property Damage Liability Coverage of $50,000.

Medical Payments coverage pays the reasonable and necessary medical, dental, hospital and funeral expenses for the insured, covered passengers and family members, who are injured in a covered auto accident, regardless of who was at fault. Coverage is also provided to the insured and resident relatives, while they are riding in someone else’s car at the time of the accident or if they are struck as a pedestrian. If you have personal health insurance (which most professional workers have) that covers most of your medical expenses, you may want to choose a lower level of coverage.

Uninsured Motorist Bodily Injury typically pays for you and your passengers’ bodily injury damages caused by an uninsured driver. The amount of coverage that you may purchase will vary depending upon the state where the policy is issued. There are a number of common exclusions to this coverage that will be detailed in your policy. Given the number of uninsured drivers, this is an important coverage, even in states with no-fault insurance.

Comprehensive coverage pays for losses to your auto not caused by collision, such as theft (like a stolen car stereo), flood, vandalism, earthquakes, explosion, fire, or other covered causes. If you have an older car, where the cash value is low, you may decide not to purchase this coverage. With comprehensive coverage, you choose a deductible – the amount that you will pay out of your own pocket – before your insurance pays your claim. For example: your car’s stereo is stolen and replacement costs are $500. If you have a $100 deductible, your insurance will cover $400 — the replacement cost minus your $100 deductible. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket.

The other side to comprehensive coverage is Collision Damage coverage, which pays for damage to an insured vehicle when it hits or is hit by another car or object, or if the car overturns. You can also choose a deductible for this coverage.

Emergency Road Service (ERS) is offered by the bigger insurance companies and is a cost effective alternative to other road services such as AAA. It covers problems not typically covered by car insurance, such as towing, lockout service, and mechanical labor if you have a dead battery or get a flat tire. ERS helps to take the hassle out of unpredictable events such as a flat tire or a dead battery, and the piece of mind is worth the $10 dollars a month I would pay for this coverage

Other Insurance Companies/Websites I got quotes from:

- US Insurance is an insurance portal that provides a way to get free auto quotes from various small and large providers. The best feature about insurance portal sites is that they give you quotes from a number of providers, though this also means your private information is now available to those companies. I found insurance quotes ranging from $500 to $1000, but overall I thought that GEICO provided a better deal. If it’s been a while since you shopped around for car insurance it may be worth starting with one of these auto insurance portals for a free quote, and then taking quotes received to get a better deal from your current or preferred provider.

- Esurance is an up and coming auto insurance company that provides discounted car insurance (owned by Allstate). They act like a broker between you and the other insurance companies and given their discount guarantee they are definitely worth visiting in this ultra competitive market. Their insurance premium quote was comparable with GEICO, and if I could have got a multi-policy discount with them, I may have gone with them.

- Safe Drivers Save up to 45% with Allstate” is the claim the company makes. So I went and tried it for myself. Unfortunately, I got well below the average savings and my quote was around $700 for comparable coverage options. I also found their website a bit cumbersome but I do think if you have multiple policies and are in certain associations/groups you could do quite well with them. Definitely worth getting a free quote from All State as a comparison point, given that they are one of the largest insurance companies out there.

Overall I spent four to five hours getting insurance quotes and it will end up saving me over $200 ($400 annually), so I think it was time well spent. Hopefully it saves you some time and money as well. Some last minute advice from all my research that I think can really save you money or get better coverage at a lower price, no matter which insurer you go with :

1. Shop Around: I cannot stress this more. Use the links in this post as a starting point and get quotes from the various websites. Then call the agent to ask about multi-policy discounts and if you belong to certain groups (e.g armed services) you may be eligible for even more discounts. Further, every other month companies update their premiums so a company you could have tried a while back that was too expensive, may now be able to provide a much better offering. No harm in getting a free quote to find out.

2. Check and Change options: Every insurance quote is unique and companies use different models to price coverage premiums based on various location and personal factors. So while you should always err on over-insurance, try changing coverage options (up and down) to see what impact it is has on the overall premium. You may well get a higher level of coverage for a few extra bucks

3. Negotiate and use price matching: There is no such thing as a fixed premium. The benefit of shopping around online is that you can quickly get a number of quotes, using similar criteria, thereby getting a very good idea of what range your insurance premium should fall in. With the quotes in hand you can negotiate for a better price your preferred providers. Most will match and/or provide extra options to keep you on as a customer.

I will add that if you are happy with your current insurer, perhaps because of their great customer service when you had a claim, then it may be worth paying a bit extra for that. Otherwise, the key is to make sure you get the most coverage for the least amount of money.

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{ 5 comments… read them below or add one }

stuart May 27, 2013 at 9:50 am

GEICO killed me. 2002 Kia(11 year old car carrying only liability) 168.00/month – 332.00/month without auto payments. Age 39 years old. AAA, if you’re in their state, go with them. I payed 80.00/month.

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Karthik September 9, 2012 at 11:53 am

So, I just happened to stumble on this page when trying to find if GEICO is getting costlier (they raised our 2 policy car insurance by $35/year).

But as far is customer service is concerned, I will only state that my experience with GEICO has been extremely satisfying. I have been with them since Nov 2004 and I am a happy GEICO customer.

Recently, I had a deer hit, and they did their job in quick time and covered the costs. No haggling or stuff. We have a claim against us by a driver who deliberately braked at a crawling traffic, took a hit in the rear of his 4X4 and has since applied for a claim for a neck surgery. I do not know how this is going to turn out, but am fairly confident that they should call his bluff. My lady is a training physician herself, this guy was in no obvious discomfort, and he made her wait for 1 hr grand for the cop to come for the incident and the cop spent a lot of time trying to find the “damage” to the rear of the 4X4…. Anyway, its my hope that we do not get slammed with a bill that is well over our coverage. But whenever I have spoken with the GEICO folks about the case, they have been extremely courteous. And so I will give GEICO 5 ***** for their customer service.

Now, just a bit about how I came over to GEICO. When I first took my insurance that was with Progressive. I was new to the US with just a small developing credit history that this agent ran a hard check on the credit. And later, he quoted an exorbitant sum for a premium. I said ok, but asked him if I can renegotiate in the future because there might be more competitive offers. He immediately jerked off and said he will decline to cover me, and made me plead with him to give the insurance (i did not want my credit to go to the negative territory for the denial). Mr. Haughty acted like he’s did me a great favor when he finally gave me one. After a couple of months, I simply switched to GEICO. I picked his call this first time, but because he started off shouting, simply ended the call. And then he left another 7 messages screaming on my phone. If it had happened today, I would have made him pay for his attitude, but then I just ignored it. Hopefully, we both learnt a lesson – me not be too honest talking to these folks about what if I leave your company for another, and him that the customer is the KING!
Thanks!

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Rebecca January 13, 2012 at 12:34 pm

I have been with State Farm for 37 years for all of my insurance needs. I’ve had claims over the years and everytime their response and settlement of my claims were handled efficiently and professionally. There was a time or two that I thought State Farm had every right to cancel my insurance coverage with them but they never did. You can pay a monthly/annual premium to any insurance company but not all insurance companies will step up to the plate and handle your claims in a manner that leaves your dignity intact, assets protected, and provide you with the fair and resonable coverage you believed your were paying for. I’d much rather pay a few extra dollars for peace of mind rather than worry whether or not I will be adequately covered in the event of a loss. I am not a State Farm Insurance Agent, or worked in any other capacity for their company.

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mike August 26, 2011 at 9:37 am

I have been with State Farm for over 21 years since I came back to the US from overseas service (USAF). During that time I have had car, house, motorcycle policies with them. The rates were a bit higher in the beginning but I was getting great service when I had a policy claim. I have yet to find a company Geico or any other to start me at the current rates I now pay. I will never ever have Geico as my insurance agent. My father (retired USAF 26 years) had been with Geico for the entire time he served, never had a claim and when he put me as a rider on his policy (my first time owning a car) so I could be insured, I had an accident. Geico paid the claim (single vehicle accident of $1800) and then promptly dropped Him. Man was he mad. He wasn’t upset with me but Geico. They could have dropped me and made me go find my own coverage. But instead decided to drop my father. I have since had a similar experience with State Farm where they did exactly that. But my rates never went up nor has the level of service dropped. So you may pay less but I feel you lose something when you bargain hunt for the lowest rate. Insurance is exactly that, insurance and the only benefit you get with it is peace of mind knowing that you protected yourself from some of the perils of living on planet Earth!

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JHunter August 5, 2011 at 8:07 pm

I would be interested to hear the reviews on claims for Geico, vs Allstate, vs State Farm.

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