Costco Car Insurance Review: All You Need To Know

Costco is a membership club that offers products and services for sale online and in its warehouse locations. Members also receive special discounts, pricing, and benefits through Costco’s partnerships. One of these benefits is Costco car insurance through CONNECT (formerly Ameriprise Auto and Home), a division of American Family Insurance.

American Family Insurance was founded in Madison, Wisconsin, in 1927. Since then it has grown into a Fortune 500 company with $34 billion in total assets and $10.6 billion in customer equity. It has been providing Costco auto insurance to members for nearly 20 years. American Family Insurance offers a wide variety of policies, including vehicle, property, business, and life insurance.

Costco members can purchase car insurance from Connect by American Family and get a member discount. Connect has a robust menu of car insurance discounts, but a slightly higher than average level of consumer complaints. Costco car insurance might be worth considering if you are a Costco member who is more interested in broad coverage than in price breaks for being a low-mileage driver.

However, don’t automatically assume your Costco membership will result in the best auto insurance rates. Shop around for car insurance quotes from multiple insurers before you make your decision.

About Costco Car Insurance

Costco car insurance is provided by Connect from American Family. Costco members are eligible for exclusive discounts through Connect, but you don’t have to be a Costco member to purchase a policy from Connect.

Car insurance policies from Costco provide standard coverage options and endorsements that you can add to your policy.

According to Costco’s website, more than 400,000 members have switched their auto insurance coverage to Connect. Costco car insurance policies are available in 44 states and Washington D.C., and certain coverages and discounts are subject to state availability.

Costco car insurance

Here’s a closer look at the core coverage types you can buy through Connect:

Liability car insurance

Liability insurance includes two parts—bodily injury and property damage. If you cause an accident, liability insurance compensates the other driver for their losses, including medical bills and vehicle damage, up to the policy limit.

Liability insurance also pays for your legal defense costs if you’re sued. In most states, drivers are required to carry a minimum amount of liability insurance.

Comprehensive insurance

Comprehensive insurance pays for your vehicle’s repairs if there is damage from a non-collision incident. For example, comprehensive insurance covers hail damage, theft, vandalism, falling objects and accidents with animals. The maximum payout for comprehensive insurance is the actual cash value of your vehicle if it’s totaled.

If you need to file a claim, your insurance check will be reduced by the amount of your deductible.

Gap insurance

Costco offers Gap (Guaranteed Asset Protection) insurance that may cover your new car if it is totaled or badly damaged. It covers the difference between the amount you owe on your vehicle and what your car is currently worth.

Costco’s gap insurance policy offers policyholders coverage for a new car or replacement during the first year of having the vehicle insured.

Collision insurance

As the name suggests, collision insurance pays for your vehicle’s repairs after an accident, regardless of fault. It also covers accidents with stationary objects, like a telephone pole or tree.

Collision covers the cost of your repairs if you collide with another vehicle in a driving accident and damage your car. It pays out without regard to who is at fault and can also be used to help with repairs if you hit an object on the road or a pothole or accidentally crash into a pole or concrete divider in a parking lot.

Comprehensive coverage pays for non-collision accidents. For instance, it may cover damages due to any of the following:

Break-in or vandalism
Shattered or cracked window or windshield
Bird, deer or other animal striking your car
Fire or explosion
Natural disasters
Something falling onto your car

Collision and comprehensive insurance are typically available together as part of a full coverage policy. These policies are usually optional, but if you lease or finance your car, you might be required to purchase them. Like comprehensive coverage, the maximum payout for collision insurance is the value of your vehicle if it’s totaled, minus a deductible.

Medical payments insurance

The medical payments portion of a policy pays for your medical bills if you, a family member, or a passenger in your vehicle gets injured in an accident. It covers expenses like ambulance rides, X-rays, prescription medication, surgery and rehabilitation. Medical payments insurance is included with a full coverage policy and does not have a deductible.

Uninsured/underinsured motorist insurance

In some states, uninsured motorist coverage is required, and it’s optional in other states. If you get hit by a driver who does not have insurance or doesn’t have enough insurance to cover your losses in full, uninsured/underinsured motorist coverage will provide additional coverage for you and your passengers’ injuries. In some states you can also buy coverage for damage to your vehicle caused by an uninsured driver.

Personal injury protection

Personal injury protection (PIP) is a required coverage in no-fault states. This policy pays for your medical bills if you get injured in an accident, regardless of which driver caused the crash. It also extends coverage to passengers riding in your vehicle who are also injured. If you live in a fault state, PIP is often available as an endorsement for extra protection.

Having PIP, or personal injury protection, insurance is required for drivers who live in states with no-fault determination. In no-fault states, drivers involved in an accident claim compensation from their respective insurance companies, no matter who is at fault. PIP covers medical bills for personal injuries resulting from a car crash.

Costco members can opt to add PIP, which may help pay for a portion of any medical treatment, lost income and funeral expenses. It can cover you, your spouse or family members living in your household, other persons named on the policy, any passenger in your car at the time of the accident and any pedestrians involved in the accident.

Uninsured motorist coverage

Costco’s uninsured and underinsured motorist insurance may pay for medical expenses incurred after an auto accident with a hit-and-run driver or a driver without required liability car insurance. It may also pay for lost income and funeral expenses.

This is not guaranteed for all accidents or states, so be sure to check your state requirements and read your full policy.

Rental reimbursement

Costco’s car rental reimbursement will pay for a rental car while your vehicle undergoes repair after sustaining damage in an accident that your insurance policy covers. This coverage is optional and allows you to choose the daily amount you want to cover you when you open the policy.

Additional Coverage

Costco auto insurance also offers the following optional coverages for your vehicle:

Accident travel expense coverage: When you’re in an accident more than 100 miles from home and your car is disabled, this coverage helps with your out-of-pocket expenses for travel or accommodation.
Gap insurance: This coverage, also known as “guaranteed auto protection” insurance, pays the difference between the value of your vehicle and the amount of your original loan in the event of a loss. This coverage extends to 120% of your vehicle’s value. It includes new car replacement coverage for the first year, then gap protection for the next two years.
Glass repair deductible waiver: This coverage is included with all auto insurance policies for no additional cost and covers windshield repairs without paying a deductible. However, windshield replacement is not covered.
New car replacement coverage: During the first year of ownership (or first 15,000 miles), if your vehicle is a total loss, you can replace it with the same make and model at a total price of up to 110% of the manufacturer’s suggested retail price.
Rental car insurance: This pays for daily rental charges if you need to rent a vehicle following an accident. Coverage is capped at the specific dollar amount that you select.
Roadside assistance and towing: This covers the cost of towing to a repair shop, as well as labor costs performed where your car has been disabled. This labor includes changing a flat, replacing a dead battery, and freeing your car from being stuck in the snow.
Stolen key coverage: Comprehensive insurance policyholders receive stolen key coverage at no extra cost. This benefit replaces the locks on your vehicle if your key is stolen. There is no deductible due if the cost is less than $250.

Costco auto insurance pricing

How much car insurance costs with Costco will depend on the make, model and age of the vehicle, the age and driving experience of any insured persons, driving records, where you live and more. However, you can reduce the premium if you qualify for one or more of the discounts Costco offers.

For example, you’ll save money if you bundle your auto insurance with a home or umbrella policy. You can find further information for bundling on the Costco discount page.

You must enter your zip code, membership number and personal information to get a quote through the website, or you can contact them via phone.

Factors that affect your premiums

Many factors determine the cost of insurance coverage, and not all companies treat them the same. They include:

Age: More experienced drivers tend to have fewer accidents, therefore they pay less for auto insurance. New drivers and those under 25 years old tend to pay higher rates.
Gender: Women tend to have fewer accidents and DUIs, and the accidents that they do have are less serious than those that men have, so their insurance premiums are lower.
Car use: The number of miles you drive and what your car is used for—leisure, commuting, work—determines your rates. The more you drive, the likelier it is that you’ll be involved in an accident. Occasional drivers pay the least.
Location: Urban drivers pay more than suburban and rural drivers due to the increased chance of accidents, break-ins, and other damage.
Vehicle: The cost of your vehicle is a major factor in insurance premiums. The likelihood of theft, cost of repairs, engine size, and overall safety record also factor into your rates.

Costco car insurance discounts

These discounts can lower premiums for Costco auto insurance customers.

Vehicle equipment

Antilock brakes: This vehicle feature rapidly pumps your brakes when you slam on the pedal to avoid your brakes locking, so you can remain in control of your vehicle.
Airbags: Airbags deploy in the event of an accident to protect the driver and passengers in the vehicle.
Automatic seat belts: Automatic seat belts are self-activated to ensure that passengers are wearing a seatbelt when the vehicle is in motion.
Anti-theft devices: Vehicle alarms, tracking devices, and other anti-theft devices protect the vehicle and make it less likely to be targeted by thieves.

Driving history and habits

Garaging discount: When you park your vehicle in a garage, a discount may apply, as it receives added protection when not in use.
Good driver discount: Safe driving habits can help reduce your premiums. This discount is only available in California. However, the Costco Insurance Agency is currently not offering new auto or home insurance policies in California.
Premier safety discount: When all insured drivers have spotless driving records for the last four years, you’ll receive a discount on your insurance.

Driver education

Defensive driver discount: Taking a refresher driving course from your state’s Department of Motor Vehicles (DMV) or an accredited organization will earn you a discount on your policy.
Education discount: Students who complete at least four years of post-secondary education may be eligible for a discount.
Good student discount: Full-time students are eligible for a discount when they maintain high levels of academic achievement.
Student away discount: Students who go away to school more than 100 miles from home may receive a discount when they don’t drive a vehicle regularly. This discount does not apply if the student has a vehicle at school.

Customer loyalty

Auto and home bundle: Customers who bundle their home or condo policy with Costco car insurance will save money on their policies.
Auto and umbrella bundle: If you purchase an umbrella policy, you’ll receive a discount on your car insurance.
Auto, home, and umbrella bundle: You’ll receive an even bigger discount when you purchase all three policies from Costco auto insurance.
Multiple vehicle discount: When you insure more than one car on one policy, you may be entitled to a discount.
Tenure discount: Customers who reach certain time-related milestones will receive lower rates on their policies.

Costco auto insurance benefits

Good for at-risk drivers

One of the pros of Costco auto insurance is the lifetime renewability option for at-risk drivers who might not be eligible for other insurers’ policies. At-risk factors can include age, experience level, credit score, location and number or severity of traffic violations. Provided you meet all criteria, you can renew the auto insurance policy as long as you also maintain your Costco membership.

To be eligible, you must live in a state that offers insurance, though it excludes Maryland and Michigan residents from this benefit. You must also keep up with premium payments, keep the vehicle in good condition, and provide all requested information to Costco. If you have any major traffic violations, you’ll be ineligible for this insurance.

Many add-on options

Besides liability, collision, and comprehensive insurance, Costco auto insurance also has add-on options like:

Medical expense coverage for you and your passengers
Uninsured/underinsured coverage
Roadside assistance
Rental car coverage

These add-ons provide access to coverage not included in your Costco auto insurance policy, helping you mitigate the cost of additional expenses.

Wide range of discounts

Costco Insurance also has a wide range of discounts for its members, including a multi-car discount when insuring two or more vehicles and a multi-product discount when bundling an auto policy with other Costco products, such as home or umbrella insurance. A good driver discount (only available in California) awards motorists for safe driving, while full-time students with good grades who meet all criteria can qualify for a good student discount.

Costco’s premier safety discount is for households with no claims, accidents or traffic violations in the previous four years. You can also save money with proof of an approved defensive driving class or if you equip your vehicle with anti-lock brakes, anti-theft components, automatic seatbelts and other safety measures. Policyholders who have had auto insurance with Costco for an extended period may also get the company’s tenure discount.

Save even more cash if your college-aged child is only home on the weekends and holidays and doesn’t drive a car insured under your policy during school days. You can also get money off your policy if you store your vehicle inside your garage; however, this discount has limited availability.

Costco auto insurance drawbacks

Doesn’t cover rideshare drivers

While some insurance companies do offer rideshare coverage, Costco isn’t one of them. If you work for a company like Uber or Lyft, you’ll need to look elsewhere for that insurance.

Low customer satisfaction rating

Customer reviews on the Better Business Bureau (BBB) give CONNECT 1.29 out of 5 stars and Costco 1.17 out of 5 stars. In both instances, most of the complaints seem to be about a lack of good customer service.

Diminishing deductible not available

The diminishing deductible option, which reduces a driver’s deductible over time for safe driving or zero claims, is not part of Costco’s auto insurance plans.

Costco Auto Insurance Financial Stability

Costco Auto Insurance is provided through American Family Insurance, who underwrites CONNECT’s policies. A.M. Best gives American Family Insurance an A (‘Excellent’) rating for its financial strength.

Costco Auto Insurance Accessibility

If you’ve done your homework and are ready to sign up for Costco Auto Insurance, there are a few things you need to know about how to get it.

Availability

Costco has 583 U.S. and Puerto Rico locations, and car insurance is available to all members at those locations. It’s not available at locations outside of the U.S.

If you don’t already have a Costco membership, you can get a quote without one. However, you must have an active membership to get a policy and maintain that membership to be eligible for lifetime renewability.

Costco members can also receive a discount on the total costs of all car insurance policies they choose. These discounts are automatically applied to the person’s Costco membership number.

Contact information

Costco auto insurance customers have access to CONNECT’s team of customer service representatives. You can contact them for roadside assistance, questions about your policy and other concerns through the information listed below.

Active policy customer service: servicepromise@connectbyamfam.com
Quote email: customersfirst@connectbyamfam.com
Phone: 1-888-239-9953
Fax: 1-920-330-5607

User experience

Customers of the Costco auto program can gain access to the American Family Insurance (AmFam) mobile app to:

File claims
Access proof of insurance
Track a claim’s status
Set up auto-pay
Schedule payments
Call for roadside assistance

Does Costco car insurance offer accident forgiveness?

Costco members can get accident forgiveness car insurance through Connect. Accident forgiveness waives your first at-fault accident, so your premium remains unchanged. However, you are only eligible for accident forgiveness once you have maintained a clean driving record and claim history for a certain amount of time.

Does Costco offer new car replacement insurance?

New car replacement insurance is available as an endorsement from Costco. This feature applies if your car is totaled — you can replace it with the same make and model. The insurance company provides up to 110% of the MSRP of the new, replacement vehicle.

You can only use new car replacement coverage if the claim occurs within the first year of ownership of your vehicle or the first 15,000 miles, whichever comes first.