Please Refresh Your Browser Window

A Consumer Reports investigation finds two excellent deals

Since the late 1990s, two companies, USAA and Amica Mutual, have consistently stood head and shoulders above the competition in our car insurance Ratings of claims satisfaction, based on the private practice of more than 128,000 customers over the past seventeen years. Generally, higher quality comes with a higher price tag. But does that hold true for car insurance?

Our investigative report, “The Truth About Car Insurance,” found the surprising response.

As the tables below display, USAA and Amica were bargain priced for our group of eight hypothetical single drivers with clean driving records and excellent credit scores, averaged across all the ZIP codes in the twenty three states where USAA and four other big national brands are all market leaders. This was also true when we looked at a subset of ten states where we also had apples-to-apples price data for Amica and the five other major insurers. The price quotes were collected in August two thousand fourteen and November 2014.

Based on their individual practice, many of our readers found the same thing about these top car insurance companies. For example, Jeannine Sawicki told us via Facebook that she’s been with USAA for forty years, “and they are amazing in every way. Every five years or so, I get a quote from someone else, but it never comes near USAA.” Sawicki says USAA’s customer service is outstanding and response to claims and questions is quick.

“AMICA! Fabulous; I’ll never leave them,” commented Rosemary Chieppo, also on Facebook.

Average annual premium in twenty three states*

Brand

Average annual premium

*New-customer rate for masculine and female single drivers ages 25, 35, 65, and seventy five with excellent credit and a clean driving record in AK, AL, AR, AZ, CO, CT, DE, FL, GA, HI, KY, LA, ME, NH, NM, NV, NY, SC, TN, TX, UT, VA, and WA, the states where all five companies are market leaders.

Lower costs passed on to customers

It’s significant to note that the premium comparison above is for a group of example policyholders with the exact same profile, who drive the same vehicle and buy the same coverage. So the only difference is the insurance company.

Why is USAA so much less expensive?

“We work very hard to keep administrative expenses low, so we can pass those savings on to our members,” said Rebecca Hirsch, a USAA spokeswoman, who added that USAA’s expense ratio, or cost for advertising, sales commissions, and other overhead related to acquiring fresh customers, is approximately half the industry average.

USAA is not available to everyone. It’s open only to members of the U.S. military, honorably discharged veterans, and the families of members. However, USAA estimates that about sixty million people qualify for membership, yet just under half of eligible veterans are aware that USAA exists.

Amica, meantime, might seem more pricey than it actually is. The Rhode Island-based insurer is a mutual insurance company, meaning it is possessed by its customers. In most states it consistently pays policyholders a dividend at the end of each year. The amount of the dividend is not assured, but it is typically twenty percent and results in a net reduction of the annual premium.

The table below shows Amica’s $1,286 average annual premium for our drivers before any dividend, which places it fourth among the six insurers. We’ve also adjusted that premium assuming a twenty percent dividend, which reduces it to $1,029 and moves Amica to second-lowest-priced in the ten states studied.

Tell other readers how you saved by adding a comment below.

Related movie: