If you drive your car frequently, having a Costco membership could save you money on your monthly auto budget. In fact, when you start rattling off the different products and services Costco offers to drivers -- from tires to cheap gas to used car buying -- it is totally possible to pay for your $60 Costco membership on car savings alone.
One of its most lucrative membership benefits is its car insurance. Through a partnership with CONNECT (a subsidiary of American Family Auto), Costco offers members exclusive discounts when they purchase car insurance policies with their memberships. If you're fortunate to live in a state where Costco offers car insurance (sorry, California and Florida), here's how it could save you money.
1. Costco's car insurance is frequently the cheapest option
Costco members may get an exclusive members-only discount when they purchase insurance through CONNECT. This discount is how most members save on average $595.86 in the first year they switch to CONNECT. In fact, third-party research by The Zebra found that full coverage insurance at Costco was cheaper than seven major insurance companies for a 30-year-old male driver of a Honda Accord. These companies included:
- Allstate
- Farmers
- Geico
- Nationwide
- Progressive
- State Farm
- USAA
Many of these companies rank high on the list of cheap car insurance providers. While some of these companies were within a few hundred dollars of Costco (for example, Geico was $1,494, while Costco was $1,068), some were noticeably higher. For instance, the average premium at Farmers was $2,790, which was about $1,700 more than Costco ($1,068).
On a personal note, I can also testify that Costco offers cheaper car insurance than most major insurance companies. I recently called to get a quote for full coverage on my 2013 Toyota Prius, and the price was slightly cheaper than similar quotes from Progressive and Geico. In the end, I went with a pay-per-mile company, since I don't drive my car frequently. But if I was a more active driver, the switch to Costco would have been worth it.
2. Drivers might qualify for other discounts
The members-only discount is only one of several discounts that CONNECT offers. In fact, you might save even more just by qualifying for one or several of the following:
- Premier safety discount: A discount for drivers who have had a clean record (no traffic violations, accidents, or claims) within the past four years.
- Defensive driver discount: Extra savings for drivers who complete an approved course to "refresh" your driving skills.
- Vehicle safety discount: Get a discount if your car has certain safety features, like anti-lock brakes, air bags, automatic seatbelts, and anti-theft devices.
- Garage discount: Park your car overnight in a garage? You might get a little discount for the extra protection.
- Good student discount: Young drivers with good grades might save money on their premiums.
- Student away discount: A discount for students who live more than 100 miles away from home.
- Multi-car discount: If you insure more than one car with CONNECT, you might qualify for this discount.
Note: These discounts aren't available everywhere. Speak to your insurance representative first to see which ones might be obtainable in your area.
3. Executive members get additional perks
Finally, if you're a Costco Executive member, you could get some extra perks with the discounts. These include:
- Roadside assistance: Get up to $75 compensation when you hit a snag on the road, such as when you run out of gas, get a flat tire, lock your keys in your car, or have a dead battery. Some areas have even higher limits, too. For example, you might get $100 in compensation if you live in Massachusetts, Maine, or South Carolina, while North Carolina has no limits and Texas gets up to $80.
- Lifetime renewability: If you get into a car accident (or several), lifetime renewability ensures that CONNECT cannot drop you as a customer. That said, there is a long list of exclusions. For example, if you live in Maine or Maryland, fail to pay your premiums, or drive a car that has undergone some kind of substantial change, CONNECT could still drop coverage. Read the fine print to get a better understanding of how to maintain this benefit.
All in all, buying car insurance through Costco could help you save money on car insurance in 2024. If you're a Costco member, check out Costco's car insurance page to generate a quote online, or call the number to start over the phone. Then compare that quote to those you get from the best car insurance companies to see which offers you the best price.
