Headquartered in Bloomington, Ohio, State Farm has been the leading provider of auto insurance in the U.S. since 1942. It’s estimated that one out of every five cars on the road is covered by State Farm. Though the company does offer a number of other types of insurance (homeowner, life, condo, and more), auto insurance is State Farm’s bread and butter.
Unlike larger insurance companies, State Farm takes pride in offering personalized, hometown service through the use of local agents, at a fraction of the usual cost. It relies on its network of over 18,000 independent insurance agents to sell its policies, and employs over 65,000 people across the U.S.
Founded as a mutual company in 1922 by retired farmer George J. Mecherle, State Farm does not report to any shareholders. Instead, ownership belongs to policyholders and investors.
As the company mission statement reads, “Our success is built on a foundation of shared values — quality service and relationships, mutual trust, integrity and financial strength. Our vision for the future is to be the customer's first and best choice in the products and services we provide.”
Overview of State Farm Auto Insurance Company
Pros
Personalized service with local State Farm agents
Lots of discounts and offerings
High financial stability ratings
Satisfaction Rating
Claims Rating
Shopping Rating
Offerings Rating
Stability Rating
Financial Stability
An insurance company’s ability to pay claims in an accurate and timely fashion is one of the most important factors in determining its overall success. While it doesn’t speak to the ease of the claims process or the customer service provided throughout, a company with a high financial stability rating will be more likely to ensure that all claims are paid out as promised.
A.M. Best, the longest serving provider of ratings and data focused solely on the insurance industry, gives State Farm the highest possible rating in the category of financial stability with a rating of A++ (Superior).
S&P Global, also sometimes known as Standard and Poor’s, gives State Farm an AA, the third highest possible ranking in their system.
Though State Farm remains one of the top choices on the market for auto insurance, it has not been without some financial struggle as of late. In 2016, State Farm suffered the worst losses of any insurance provider on record—a staggering $7 billion. This is widely attributed to the rise in dangerous distracted driving. In 2017, it reported $6.5 billion in losses. Despite these dismal auto underwriting numbers, State Farm still manages to come out on top company-wide.
Claims
In 2017, State Farm ranked 8th in J.D. Power’s Auto Claims Satisfaction Study with a score rating of 3 out of 5. Out of the so-called big four insurance agencies (Geico, Progressive, State Farm, and Allstate), State Farm ranks second, falling behind only Geico.
In the event of an accident, State Farm gives you the option to submit a claim by phone, online, or with their mobile app. As with most large insurance companies, you’ll be able to choose a body shop from a list of pre-approved auto repair services. Of course, you’re welcome to take your vehicle to the mechanic of your choosing, but selecting a shop from the approved list can ensure that you don’t end up paying anything extra out of your own pocket.
Shopping Experience
J.D. Power’s 2017 U.S. Insurance Shopping Study ranks State Farm as about average in overall purchase experience, scoring four points above the industry average on a 1000 point scale.
Though State Farm is a nationwide company, its reliance on individual agents to connect with customers means that the shopping experience isn’t always consistent across the country.
When you open a policy with State Farm, you do so with a licensed State Farm insurance agent. Customers can go online to get through the beginning stages of opening a policy, but then must speak directly to an agent either in person or over the phone. This means that each policy will be tailor-made to meet every requirement set by local regulations, and you won’t be caught wrapped up in red tape if you need to file a claim.
Despite the fact that it’s necessary to speak with an agent, it generally takes about ten minutes or less to start an auto insurance policy.
Value
Because it relies on individual agents, there are a couple of factors to consider when assessing the value State Farm auto insurance has to offer.
Compared to its competitors, State Farm’s prices tend to run in the middle of the pack. It’s not as cheap as Geico, whose streamlined sign-up eliminates the need to pay out hefty commissions to insurance agents.
However, if you’re looking for a personalized shopping experience and a policy that’s been given the fine-toothed comb treatment, a licensed insurance agent might be what you’re looking for. When you choose a State Farm agent, you’re likely to pay less than you would with a smaller local insurance company.
When it comes to the value State Farm offers, location is everything. In midwestern states, State Farm tends to rise to the top when it comes to both customer service and pricing. However, in some southern states and on both coasts, prices tend to rise while customer satisfaction falls.
Discounts Offered by State Farm
When it comes to incentives and discounts, State Farm has several options to put your hard-earned money back in your own pocket.
Steer Clear – The Steer Clear program promotes driver safety by offering a refresher course on the rules of the road to drivers under 25. To qualify for the program, a driver must not have had any moving violations or at-fault accidents within the last three years. Upon completing the program, drivers are eligible for a discount of up to 15 percent off their premium.
For drivers under 19, the Steer Clear program requires its participants to make 20 trips behind the wheel while under the supervision of a licensed driver over 25 years of age, as well as a viewing of the Steer Clear education video. For drivers between 19 and 25, only five supervised driving trips are required, and the video is optional. If the driver is able to complete each trip with no violations or at-fault accidents, they pass the course and are eligible for the Steer Clear discount.
Drive Safe and Save – In the Drive Safe and Save program, State Farm customers are rewarded for their careful, risk-free driving.
Driving habits are analyzed over a period of time using Onstar or SYNCH (if your car is equipped with either), or by downloading the Drive Safe and Save mobile app. Your mileage is tracked using GPS technology, and State Farm assesses the safety of your daily driving. This program is a natural fit for customers who don’t drive often and always stick to the rules of the road when they do get behind the wheel.
Though some drivers may be turned off by the idea of their auto insurance company tracking their habits and locations, the potential discount offered by the Drive Safe and Save program is sizable. All State Farm customers earn a discount of five percent simply by signing up, and the safest drivers can score savings of up to to 50 percent off their policy premium.
Accident Free Discount – Gone three years with the same policy and no accidents? You could qualify for a discount on your premium. The best part: as long as you continue to hold your State Farm auto insurance policy with no chargeable accidents, your discount may increase over time.
Defensive Driving Course Discount – Upon completion of a qualified driver safety course, you may be eligible for a reduced premium. This discount may not be available everywhere, so check with your local State Farm agent to find out about the options in your area.
Student Away At School Discount – Why should you pay extra to insure household members who aren’t regularly home to drive your vehicles? If your policy includes a student who is under 25 and away at school, you may be able to receive a discount.
Good Driver Discount – If you’ve gone more than three years without a moving violation or at-fault accident, you could be eligible for the Good Driver Discount. This is offered to qualifying new customers upon signup.
Good Student Discount – It pays to study, in more ways than one. Good grades can score students a hefty discount of up to 25 percent off their auto insurance premium. Plus, you get to keep your discount even after you graduate, until you turn 25.
Driver Training Discount – If your policy covers any drivers under 21, signing them up for an approved driver safety course can land you this discount upon completion.
Vehicle Safety Discount – You may be eligible for up to a 40 percent discount on medical-related coverage if your vehicle was made in 1994 or later. Discount specifics can vary based on the make and model of your vehicle, and are subject to change every year.
Passive Restraint Discount – If your vehicle was made before 1994 and has a factory-installed airbag or similar restraint system, you may be eligible for a discount. Like the Vehicle Safety Discount, this could take up to 40 percent off medical-related coverage on your policy.
Anti-Theft Discount – Vehicles equipped with an anti-theft device could receive a discount. Details may vary, so consult with an agent for more information.
Multiple Auto Discount – If your household has two or more vehicles that are both insured by State Farm, you could receive a discount of up to 20 percent.
Multiple Line Discount – If you have State Farm auto insurance, adding rental, homeowner, condo, or life insurance could save you up to 17 percent.
Services and Offerings
On top of their standard auto insurance offerings like comprehensive, collision, and liability, State Farm has two programs in particular that stand out from the crowd.
Rental Insurance Program – When it comes to taking care of customers who need a rental when their car is in the shop after a covered collision, State Farm is a notch above the competition.
While most insurance companies offer some degree of rental coverage, State Farm takes it to the next level. Rental customers may be eligible for 100 percent reimbursement while their primary vehicle is out of commission. Not only that, but State Farm will also cover the cost of transportation, meals, and lodging if you find yourself stranded over 50 miles from home (details may vary by state).
Rideshare Coverage – State Farm takes strides to cater to the needs of Uber and Lyft drivers by offering insurance coverage while they’re on the clock.
Customers have the option to purchase an endorsement that covers their vehicle for both personal and commercial use without having to go through a separate insurance provider. This can be a huge benefit when your income is at stake and you need it the most, as the auto insurance companies used by both Uber and Lyft are notoriously difficult when it comes to filing a claim.
Customer Satisfaction – J.D. Power’s 2017 Auto Insurance Claims Satisfaction Study ranks State Farm as average in overall customer satisfaction with a score of 865 out of 1000. The industry average, according to the study is 858.
In 2016, State Farm surpassed the median number of complaints made to state regulators overall about their auto insurance services. However, the actual numbers indicating customer satisfaction vary greatly based on location.
It’s also worth noting that among the big four auto insurance providers, the J.D. Power 2017 U.S. Insurance Shopping Study showed State Farm to be leaps and bounds ahead of the competition in customer shopping satisfaction. State Farm’s user-friendly website gets the shopping experience off on the right foot, and the personal touch of a local insurance agent makes sure every requirement is met.
Customer Satisfaction
J.D. Power’s 2017 Auto Insurance Claims Satisfaction Study ranks State Farm as average in overall customer satisfaction with a score of 865 out of 1000. The industry average, according to the study is 858.
In 2016, State Farm surpassed the median number of complaints made to state regulators overall about their auto insurance services. However, the actual numbers indicating customer satisfaction vary greatly based on location.
It’s also worth noting that among the big four auto insurance providers, the J.D. Power 2017 U.S. Insurance Shopping Study showed State Farm to be leaps and bounds ahead of the competition in customer shopping satisfaction. State Farm’s user-friendly website gets the shopping experience off on the right foot, and the personal touch of a local insurance agent makes sure every requirement is met.
