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UPDATED: Mar 13, 2020
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State Farm and Allstate are the two largest car insurance providers in the country. It’s easy to confuse the two due to the similarities in names, but the companies do handle themselves quite differently. State Farm is substantially larger, holding 17% of the market share compared to Allstate’s 11%, and State Farm employs many more people than any other insurance company.
In terms of price, the cost of insurance will depend on the specific driver. All insurance companies selectively set their rates to attract drivers of the risk category they wish to insure. People outside of that category will pay substantially higher rates. Depending on your age and driving record, you may get a quote much higher from one company than another. The best way to compare the two companies is to see what features they offer that make them unique.
Founded in 1922, State Farm is the largest property and casualty firm in the world. It employs over 67,000 people and an additional 17,000 agents. It currently provides policies to 77 million people; of these, slightly over half are auto insurance policies. State Farm’s massive size has secured it a place in the top 50 Fortune 500 companies in the world.
Due to its massive size, State Farm has the ability to offer extremely competitive rates to people in its target demographic. In many cases, it outstrips the competition significantly. People outside of its target demographic may find its rates to be higher than they can get elsewhere.
There was a large lawsuit against State Farm in 2008 regarding the use of aftermarket parts and inferior repairs. Although the suit was eventually overturned, many people believe that the repair quality for claims has increased since this suit.
Pros of State Farm:
— All insurance matters, including claims, are handled by an agent.
— 10% safe driving discount if you drive for three years without any car accidents.
— 5% discount for enrolling in the “Drive Safe & Save” program
— High customer service rankings
Cons of State Farm:
— It’s difficult to file a claim after business hours due to the lack of a centralized claims department
— You need to get a new agent every time you move to a new area.
— Coverage is substantially more expensive in some states than others
State Farm has a JD Power ranking of four out of five and a customer service smart ranking of five out of five. Most State Farm customers are very happy with their policies, due in part to the close relationships they forge with their agents. Getting a good agent is vital to satisfaction with State Farm since that individual will be your primary contact for all matters related to your insurance.
Founded in 1931, Allstate is the second-largest insurer in the country. It employs about 35,000 people. Although it does sell numerous policies through agencies across the country, Allstate has an increasingly large focus on direct sales. Claims are mostly handled through claims centers, and customers can file over the phone, online or through their agencies.
Although Allstate is far from the cheapest insurance company, it is competitive with State Farm, and in some states it has more affordable policies. It also has a large number of discount programs that make it appealing to a wide variety of insureds.
In 2008, Allstate received criticism for not paying medical expenses related to claims. The insurance company insists that its practices are reasonable and that the allegations are unfounded.
Pros of Allstate:
— Your Choice Auto packages provide both accident forgiveness and deductible reduction rewards
— Up to a 30% discount for safe driving through DriveWise, Allstate’s pay-as-you-to insurance plan
— 24-hour claims service and online claims reporting
— A large network of preferred body shops to expedite repairs
Cons of Allstate:
— Inspections can take a long time to complete if you do not use an Allstate-approved body shop
— Lower customer satisfaction ratings than some other insurance companies
— Rates tend to be higher than many other insurers
Allstate ranks four out of five for customer service smart ranking and three out of five for JD Powers. The company has a higher rate of complaint than State Farm in many areas, due perhaps to the structure of the claims and customer service departments. Allstate outsources its customer service, and people who choose to purchase policies directly may have a more difficult time understanding what they’re buying than individuals who utilize agencies.
Overall: Which Company is Better?
The price of insurance will vary between states. For example, in Arizona, State Farm tends to be cheaper. In New York, Allstate offers more affordable policies. The Your Choice Auto program offered by Allstate is a very attractive option for people who want to save money in the event of an accident, but the 10% safe driving reward for State Farm may appeal more to people who do not foresee having any accidents.
Ultimately, the only way to decide which company is best for you is to obtain a quote from both companies. Be sure to speak with representatives or agents from each company to get an idea of what the customer service is like and whether you can connect with the company as a whole. Exceptional customer service may be worth a higher premiums cost for some people, so it’s worth weighing your options carefully rather than deciding upon a company based wholly on price.