Costco sells auto insurance to members of its buying club, but Costco doesn't actually provide the insurance. Instead, its policies are underwritten by American Family Insurance under the brand name CONNECT. American Family Insurance acquired Ameriprise Auto & Home Insurance — which previously handled Costco policies — in 2019.
Drivers purchasing car insurance through Costco may be eligible for a discount off American Family's rates, which are already reasonably affordable. They also receive a few minor perks like free roadside assistance. But consumers who prize great customer service from their insurers may want to look elsewhere, as American Family has below-average client support.
Costco Car Insurance: Our Thoughts
Costco's auto insurance policies are typical in many respects. Car insurance coverage is underwritten by American Family, one of the 10 biggest insurers in the country. The vehicle insurance rates, discounts and coverages offered by American Family are strong, though not industry-leading, and the company has below-average customer service.
However, depending on your level of Costco membership, you'll get a few special perks in addition to what's available for all American Family customers. All members can expect to get a discount off American Family's standard auto insurance rates, though Costco doesn't reveal the extent of the discount.
The most compelling perk of Costco insurance is only available to Costco's Executive Membership tier: lifetime policy renewability. If you qualify for this free benefit, American Family will never cancel your policy because you got into too many accidents. This doesn't mean your car insurance rates won't increase after an accident, though, and your policy may still be canceled after a serious infraction like a DUI.
Executive members also get free roadside assistance and some may be eligible for a $100 Costco gift card when they sign up for a new policy.
The rates drivers can expect to receive from Costco and American Family are competitive with other insurance companies. They also offer most of the discounts you'd typically expect, such as for safe driving, for bundling your auto and home insurance policies, and a customer loyalty discount staying with American Family for several years. However, drivers may miss out on more forward-thinking discounts and benefits available from other insurers, such as a discount for using a telematic driving tracker.
The biggest drawback to purchasing Costco auto insurance is American Family CONNECT's poor customer service reviews. They have a disproportionate number of complaints for a company of its size, especially with regards to settlement amounts and claims delays.
Shoppers in Tennessee are not eligible for Costco's auto rate discount, and only Executive members qualify in Massachusetts.
Costco Insurance Bottom Line: Costco's auto insurance is a good option for current members of the warehouse club and anyone concerned about having their policy canceled after an accident. But American Family's substandard customer service ratings mean that if you can find a comparable rate elsewhere, you might be better off going with another option.
Costco Auto Insurance
Costco auto insurance, through American Family CONNECT, includes all the coverages you'd expect from a major insurance company. American Family is one of the cheaper major insurers on the market, but it has a below-average customer service reputation. This policy is a good fit for those who are already Costco members and are looking for savings.
Costco auto insurance benefits and discounts
Drivers purchasing insurance from Costco are eligible for a few special benefits exclusive to Costco members, in addition to the discount they receive on their premiums. However, the free gift cards previously available to Gold Star, Business and Executive members appear to no longer be available.
Executive members get two additional perks: free roadside assistance and a guaranteed option to renew their policies. Typically, insurers have the option not to renew your policy at the end of its term if you commit too many driving infractions. But with this benefit, you'll always have the option to renew your policy from American Family regardless of how many accidents or traffic violations you're involved in. However, the company can still raise your rates.
One thing to note: Because your car insurance plan is not purchased from Costco, Costco Executive members will not receive 2% of their car insurance premiums back as part of their annual 2% reward.
American Family car insurance benefits and discounts
Drivers who purchase their auto insurance through Costco are also eligible for the benefits and discounts American Family offers to all its drivers. One notable benefit is that American Family waives the deductible for auto glass repair. Another is accident travel expense coverage, covering your out-of-pocket costs for travel or accommodation if your car is disabled more than 100 miles from home..
Discounts available from American Family CONNECT include the following.
- Safe Driving Discount: American Family provides several discounts for safe drivers. This includes discounts for three or more years of driving without causing an accident and for taking a defensive driving course.
- Bundling Discount: If you purchase more than one insurance policy from American Family— whether it's for multiple vehicles or bundling your auto, home and life insurance together—you'll get a reduced rate on all of them.
- Safety Feature Discount: Cars equipped with modern safety and anti-theft features, such as air bags and alarms, will receive a discount.
- Longevity Discount: Drivers will get a discount after three years' worth of continuous coverage from American Family.
- Discounts for Students: American Family lowers your rates if you or someone in your family has completed four years of postsecondary education. And if you're a full-time student under 25 with a "B" grade average or better, you'll get a discount. American Family will also reduce the rates for families with a student living more than 100 miles from home who doesn't have a car.
Costco insurance coverages
Automobile insurance from Costco and American Family provides all the most common and required coverages that drivers need, including liability coverage for bodily injury and property damage, collision and comprehensive coverage, and medical payments or personal injury protection.
In addition, American Family provides a few optional coverages drivers can purchase for extra protection:
- Roadside Assistance and Towing: Covers costs of roadside assistance, like when you have a dead battery, lock your keys in your car or get a flat tire. It covers up to $75 per incident, and it's included if you have a Costco Executive Membership.
- Gap Insurance: If you have a lease or loan on your car and it is totaled in an accident, gap insurance pays for the difference between what you owe and the replacement cost of the car.
- Rental Car Reimbursement Coverage: Rental car reimbursement insurance pays for a rental car while your vehicle is being repaired after an accident. It covers up to $30 per day and $900 per incident.
Costco auto insurance quotes
To understand how rates available at Costco compared against other insurance companies, we collected sample quotes for a sample driver profile across the country. Overall, we found the car insurance rates available to Costco members to be very competitive. Costco and American Family rates are cheaper than the national average.
The quotes we received when our driver purchased a full coverage policy — which adds comprehensive and collision insurance — were particularly impressive: American Family was the one of the cheapest major insurers in the country when our driver added these extra coverages.
Although American Family does not reveal its rates including the Costco member discount, Costco members may be able to utilize that discount to get even cheaper rates. If you're already considering American Family you should get a quote and see how much you can save with the Costco discount, as it may be more than the cost of a Costco membership itself.
Costco Insurer Ratings
|NAIC||Complaint index (auto)||1.79|
|A.M. Best rating services||Financial strength rating||A (Excellent)|
|J.D. Power||Claims satisfaction rating||3/5 (Average)|
Costco Auto Insurance Reviews and Ratings
All of the interaction you'll have with your Costco auto insurance will be between you and American Family, from buying your policy to making a claim. So American Family's customer service is what will impact your overall experience the most, not Costco's.
Unfortunately, American Family has substandard reviews when it comes to its customer service. They have a NAIC complaint index of 1.79, meaning they received an above-average number of complaints as compared to the amount of business they write. The most common complaints from consumers related to the amount American Family paid out after an insurance claim and how long it took for the company to pay out the claim.
On the other hand, American Family CONNECT is highly rated with regards to its financial strength, having received an A "Excellent" rating from A.M. Best. Shoppers shouldn't worry about the longevity of American Family when selecting it as an insurer.