If you’re under 30, the name State Farm probably evokes images of agencies in strip malls or ads targeting military or rural families. The century-old brand exudes “old school,” but does that mean they have little to offer young urbanites?
Well, you might be surprised. Here, I investigate State Farm.
What is State Farm?
State Farm is the nation’s largest auto insurer, offering home and life insurance as well. Though they tend to target young families, the military, and rural populations in their marketing, they offer excellent tech and generous discounts favoring young urban drivers.
Can a Fortune 50 company really provide you with the personalized, transparent experience of a boutique provider? Let’s investigate.
How does insuring with State Farm work?
If you’ve ever solicited an insurance quote online, there are few surprises on statefarm.com. On the home page, you’re prompted for auto, home, or life, and then you submit personal and vehicle details until a quote appears.
State Farm’s quote wizard stood out to me in four ways:
- Live agents – Unlike Geico or some startup/boutique providers, State Farm seems eager to connect you to a live person. On the second screen of the wizard, State Farm fills the sidebar with local agents’ contact information.
- Accident forgiveness: While some competitors ask you to list all at-fault accidents or tickets within the last five years, State Farm only goes back three years (though they do still ask for major violations or suspensions going five years back).
- Phone # optional: I only made the mistake of giving a prospective insurer my phone number once, and local agents have been harassing me ever since. Blessedly, State Farm leaves this field optional.
- Live on a farm? In a curious detail I haven’t seen before, State Farm has an option for “Farm/Ranch” under Residence Type.
How are State Farm’s customer service ratings?
According to the National Association of Insurance Commissioners, State Farm received the fewest customer complaints of any major insurer in 2018. However, they scored second place behind Geico for overall customer satisfaction. Interpret that as you will.
On customer review sites like Better Business Bureau and Consumer Affairs, all of the major insurers tend to score around the same rating (~3.8 stars out of 5). For that reason, I dug into the written reviews to see if there were common themes among upset customers.
In the case of State Farm, unhappy customers tend to call out mixed experiences with agents. While these may be isolated cases, you can likely increase your chances of having a good experience by building a relationship with an agent early on.
How much does State Farm cost?
Given the countless variables that dictate rates, it’s hard to definitively say which provider is the cheapest. Generally speaking, however, State Farm tends to muscle out the competition and rank somewhere between 1st and 5th among 22 providers.
As evidenced by their generous safe driving programs and discounts, State Farm’s algorithm tends to favor good drivers. If you have poor credit and/or one at-fault accident, you may find lower rates elsewhere.
Still, a low premium is virtually pointless if your provider doesn’t payout for claims.
AM Best is an independent organization that assigns major insurance providers with “Financial Strength” scores indicating their ability (and likelihood) to pay out claims. Luckily, State Farm scores an A++ “Superior” rating, so they’re far from stingy.
State Farm features
Again, for all of their marketing towards families and first-time homebuyers, State Farm is remarkably friendly towards safe, young drivers.
Drive Safe & Save
Allow State Farm to monitor your mileage and driving behavior and they’ll discount you up to 5% just for signing up, and 30% for driving like a saint.
The company monitors your driving through a small Bluetooth device that you tape inside your car. It grades you as you go along, and offers a warning if you’re driving too vigorously (and jeopardizing your discount). You can view your live results through a program-specific app.
My friend Eric and I both opted in. He drove his BMW like Evel Knievel and scored a “D,” but still managed a small discount. I, on the other hand, opted out after two days. To me, giving up the discount was worth the comfort of not being monitored by my insurance company.
Still, if you drive like a sensible adult and don’t stare down the devil on on-ramps like me, Drive Safe & Save may be a no-brainer.
If you drive for Uber or Lyft, your personal auto insurance may not cover you while you’re on duty. This lesser-known gap has unfortunately caused many surprise financial headaches for rideshare drivers.
Thankfully, State Farm both encourages you to connect with a live agent to identify your gap and provides rideshare insurance to fill it.
Steer Clear driver program
If you’re under 25 and haven’t had an at-fault accident in the last three years, State Farm offers you an online course to further reduce your premiums.
Like drivers ed the sequel, Steer Clear involves a few app-based tests, quizzes, and 10 hours of monitored driving. Pass, and you’ll receive a (presumably) hefty discount on premiums.
Car rental and travel expenses coverage
If you spend a lot of time driving far from home, this is the perk for you.
Imagine your car becomes undrivable 50+ miles from home. Many carriers may only provide reimbursement for towing and/or a rental car, but State Farm covers up to $500 in travel expenses, including lodging, meals, and even the return trip to pick up your car.
Access to agents
While I love slick apps and online wizards, half of all insurance shoppers still prefer to buy insurance from a live agent. If that’s you, good news: State Farm has the most agents of any insurance company. There are 19,000, compared to Allstate’s 11,600.
If you like your insurance experience to be a little more human, State Farm has you covered.
My experience using State Farm
As you can see from above, my online quote experience was totally painless. The local agent I spoke with was kind, detail-oriented, and clearly eager for my business. But despite her much-appreciated efforts, I could not find a rate quite as competitive as what I’m currently paying.
State Farm’s algorithms and business model simply don’t favor my personal case. Their perks either don’t apply or don’t appeal to me and notwithstanding my excellent phone experience, I don’t value having a live agent on my side; I’d rather keep my insurance experience online.
That all being said, I acknowledge that I’m simply not State Farm’s ideal customer. I’m not looking for an agent or a bundle, and I’m a… vigorous enough driver that I’ll forgo an automatic discount to keep Big Brother from watching.
Nothing about my State Farm experience was even close to negative; it just wasn’t a good fit.
Who is State Farm best for?
Drivers who value customer service
State Farm is old-school, there’s a wide variety, and you’ll get excellent customer service. If you’re looking to build a long-term relationship with your provider and eventually bundle in additional insurance, State Farm is a good choice.
Drivers who routinely drive 50+ miles from home
If you usually drive long distances for work or school, you should know that State Farm is perhaps the best provider for getting you home, with $500 in travel expenses reimbursed.
Who shouldn’t use State Farm?
Drivers looking for the best price
It’ll be an exceptionally rare case when State Farm offers you the cheapest premium on the market. They have an army of agents and contractors to feed, and their rates reflect that.
Drivers who don’t value connection to a live agent
One could justify State Farm’s higher rates by saying “that’s the cost of good service.” But if the thought of getting on the phone with a live insurance agent nauseates rather than comforts you, State Farm might not be your best option.
Pros & cons
- Easy to connect with a live agent — State Farm has a whopping 19,000 independent agents ready to earn your business.
- Well-supported site and mobile app — State Farm’s tech is new school, well-designed, and supported to compete with online-only providers.
- Wide variety of products and bundle options — State Farm offers virtually every insurance and bundle option you could want.
- Above-average service — State Farm customers are generally happier than average.
- Experience with individual agents may vary — Many complaints leveled against State Farm reference a poor experience with a particular agent.
- Availability varies by state — Not all State Farm products and discounts are universally available, so be sure to gather a personalized quote.
- Higher-than-average rates — State Farm’s premiums tend to fall in line with other major traditional providers like Allstate, but struggle to compete with online-focused providers like GEICO.
State Farm vs. competitors
|Competitor||Advantage compared to State Farm||Disadvantage compared to State Farm|
|Liberty Mutual||More discounts (newly married, online payment, etc.)||Weaker customer service|
|Allstate||More discounts and more in-person agents||Potentially higher premiums|
State Farm is your jack-of-all-trades insurer. They’ll cover anything and everything and support it with excellent service but at a cost. Customers seem generally happy with their tech, site usability, and agent responsiveness.
Of all the providers I’ve researched, State Farm is the most dichotomous, being both highly modern and endearingly quaint. If you’re feeling antisocial and tech-savvy, you can rocket through their slick online wizard in minutes. Or, if you’re aching to haggle like the dad in “A Christmas Story,” you can drive to a State Farm office and purchase a plan in person from a courteous 59-year-old named Steve.
While they cover the bases technologically, State Farm falls a little short to the competition in a few areas.
State Farm’s premiums are similar to those offered by Allstate, but Allstate offers a more well-rounded approach than State Farm. For starters, Allstate offers more discounts than you can imagine. State Farm offers a decent array of discounts, too, but if you have a good driving record and tend to qualify for many discounts, Allstate may be a better fit.
Allstate also offers the perk of local agents in most places, even in more rural areas. If you like going old-school and connecting with a local agent, Allstate can help.
Liberty Mutual is an insurance company that has been around for over 100 years and has consistently marketed themselves as an insurer that really cares. In fact, one of their main slogans is: “we believe insurance should ease your concerns, not cause them.”
Liberty Mutual offers a big selection of policies, including home, renters, auto, life (term and whole life), flood, business, accident, and pet insurance.
- Lots and lots of discounts
- Make a claim in minutes
- Fast quotes
- Pay-per-mile option
- A company who cares
- Not the best customer service reviews
- Not all coverage is available in every state
Compared to another large and more old-school provider like Liberty Mutual, State Farm wins out on customer service. When looking at complaints for all products offered, Liberty Mutual scored an average of 4.55 complaints per policy written, while State Farm scored just 2.58 in the NAIC’s ratings.
However, Liberty Mutual tends to be a little more innovative and generous in their discounts, reducing premiums for online payments, being newly-married, and even for driving a hybrid or electric car. If you qualify for those, you may find that Liberty Mutual’s lower premiums justify the lower customer satisfaction ratings.
State Farm is like the Costco of insurance providers. You can buy online or in-store, and if you have questions or trouble, you can always go in and speak to someone in person.
They may not always compete with online-only retailers, but they provide great deals on bundles and a more human experience when you need it.