What doesn’t this big-box retailer sell?
When you think of Costco, you probably picture a four-pack set of deodorant, low-priced widescreen TVs, and the retailer’s famous $1.50 hot dogs. But you may not know Costco also sells insurance through CONNECT, part of American Family Insurance. You can purchase car insurance from Costco and bundle it with homeowners insurance for more savings. But is this insurance worth the switch?
On its website, Costco emphasizes that, out of those who saved money when they switched to CONNECT, the average savings for Costco home and auto bundlers was $587.17 for the first year. The key words here are “out of those who saved.”
Most insurance providers use this phrasing to neglect customers who didn’t save money by switching auto insurance companies. Costco doesn’t reveal the average savings across all customers, so there’s no way to know for sure if you can save by switching to their policy unless you request a quote from them.
That said, with CONNECT, you can potentially receive insurance discounts for the following.
Now that we know the ways CONNECT can potentially save you money on car insurance, let’s talk about what their policies can cover.
|Costco roadside assistance||Montana||South Carolina||Texas||All other states|
|Maximum reimbursement per occurrence||$100||$100||$80||$75|
If you’re a Costco Gold Star member and not a Costco Executive member, you must add towing coverage to your policy for an additional cost to get roadside assistance.
Costco offers more than just car insurance for its members, both through CONNECT and through other providers. Other available policies include the following.
While we only have Costco and CONNECT’s data to rely on, which undeniably does not tell the whole story, customers tend to like CONNECT. Nearly 90 percent of its Costco customers renewed their policies, while 89 percent were satisfied with the service2. It’s certainly a positive that most American Family CONNECT customers appreciated the customer service behind the products and services.
Looking beyond self-reported data, American Family, the company behind CONNECT, has great third-party ratings with J.D. Power and the Better Business Bureau (BBB). According to the J.D. Power 2021 U.S. Insurance Shopping Study, American Family, commonly known as AmFam, is the highest-ranking midsize insurer, with a customer satisfaction rating of 899 out of 1,000 (the average is 858)3. American Family is not accredited with the BBB, but it has an A rating and provides customers with 68 years of experience4.
As of 2021, American Family had a 2 percent share of the U.S. property and casualty market, according to data from the National Association of Insurance Commissioners5.
If you’re not already a Costco member, you should take the membership fees into account when considering whether or not to use CONNECT as your auto insurer.
|Shop online and in warehouses||Yes||Yes|
|Number of membership cards||2||2|
|100% satisfaction guarantee||Yes||Yes|
|Annual reward||No||Up to $1,000 (2% on eligible Costco and Costco Travel purchases)|
|Cost per year||$60||$120|
Costco memberships don’t make sense for everyone. If you live alone, lack storage space, or primarily rely on perishable items, being a Costco member may not save you money6.
Connect. (2022). https://www.connectbyamfam.com/
Costco Members Could Save on Auto and Home Insurance. Costco. (2022).
Auto Insurance Shopping Surged during Pandemic in 2020 but Little Brand Differentiation Apparent, J.D. Power Finds. J.D. Power. (2021, Apr). https://www.jdpower.com/business/press-releases/2021-us-insurance-shopping-study
American Family Insurance. Better Business Bureau. (2022). https://www.bbb.org/us/wi/madison/profile/insurance-companies/american-family-insurance-0694-5002017
PROPERTY AND CASUALTY INSURANCE INDUSTRY 2021 TOP 25 GROUPS AND COMPANIES BY COUNTRYWIDE PREMIUM. NAIC. (2022). https://content.naic.org/sites/default/files/research-actuarial-property-casualty-market-share.pdf
12 Times a Costco Membership Won’t Pay Off. Reader’s Digest. (2022, Feb). https://www.rd.com/list/when-costco-membership-not-worth-it/