Is co-op auto insurance any good? [Discounts & Expert Advice]

Auto insurance co-ops can be good for drivers with good records. Save up to 25% on traditional coverage with hidden discounts for students and teachers.

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Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance...

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Reviewed byDaniel Walker
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UPDATED: May 18, 2020

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Things to remember...

  • A co-op is a cooperative enterprise where a group of people works together for the common good of the group
  • Co-op car insurance offers an alternative to traditional auto insurance
  • Auto insurance co-ops have lower overhead than traditional auto insurance companies because they do not have executives with bloated salaries
  • You must have a good driving record to join an auto insurance co-op, and most of them do not offer discounts
  • Learning how to compare auto insurance pricing when shopping and doing regular policy reviews helps you save money on your auto insurance policy

An auto insurance co-op offers an alternative to buying auto insurance from a traditional company. However, not every driver qualifies to be a member of an auto insurance co-op.

The following sections can help you decide if joining an auto insurance co-op is right for you. We also provide information on how to ensure you get the best deal no matter what type of auto insurance you choose.

Compare auto insurance quotes right here by entering your zip code above and find out if a co-op is right for you.

How Co-Op Insurance Works

What is co-op insurance? A co-op is a group of people who work together for each other’s benefit. There are co-ops for many different things, including housing, jobs, and auto insurance. They offer similar services and conveniences, like the ability to pay co-op insurance online with a co-op portal login. 

A co-op’s small size leaves it more vulnerable to risk than a traditional auto insurance company, so they usually don’t accept drivers with spotty driving records. Also, they rarely offer discounts on premiums, such as good student or multi-car discounts.

Auto insurance co-ops operate differently from traditional auto insurance companies in a few important ways.

This video from eHow talks a little bit about co-op auto insurance and how they keep costs low.

So, what is a co op insurance policy?

Here are some reasons why a co-could be a good idea for you if you have a good record.

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Is joining an auto insurance co-op a good idea?

Is co-op insurance any good? The benefit of joining an auto insurance co-op is that little to none of your premium dollars will be used to pay expenses that don’t directly benefit members of the group but this doesn’t necessarily mean you’ll pay lower premiums with a co-op.

You also might feel like the co-op service center seems more personal than a large corporation’s system.

And if you can pay less with a traditional auto insurance company, does it matter that a dollar or two of your premium payment goes toward the CEO’s beach house?

Auto Insurance Co-ops Have Fewer Expenses

With traditional auto insurance, customers’ premiums represent the company’s revenue. The company, like any business, pays its expenses from this revenue.

Some of these expenses are claims paid out to customers who have car accidents or otherwise receive vehicle damage.

However – and this is where traditional auto insurance companies differ from co-ops – car insurers have a lot of overhead that isn’t directly related to paying claims for customers.

For one thing, traditional auto insurance companies usually have the following employees who draw salaries:

  • executives
  • salespeople
  • a marketing staff
  • accountants
  • a host of other administrative employees

Their headquarters are housed in big, fancy office buildings in urban centers. They run expensive ads on TV and the radio.

Someone has to pay all these expenses, and it ends up being the customers in the form of higher premiums.

That said, the average customer’s share of their auto insurance company’s administrative expenses is small due to the sheer number of customers most of these companies have.

Co-ops collect premiums just as traditional auto insurance companies do, and they also pay out claims. But aside from a few employees vital to their operations, such as adjusters, they have none of the administrative expenses of traditional auto insurance companies.

Rather than high-paid C-level executives, co-ops vote on a board of members (or customers) to make decisions on behalf of the group.

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Auto Insurance Co-Ops Are Not for Profit

Another important difference: traditional auto insurance companies are for-profit enterprises that exist to make money. Co-ops do not care about making money and only want to cover their expenses.

So they only charge enough in premiums to cover what they expect to pay in claims.

You Get No Discounts With An Auto Insurance Co-Op

Traditional auto insurance companies offer the opportunity to receive several discounts on your premiums. Some of the more common auto insurance discounts include the following:

  • Good student discounts
  • Multi-car discounts
  • Multi-line discounts
  • Anti-theft protection discounts
  • Accident-free discounts
  • Military discounts

By combining a few of these discounts together, you might be able to reduce your auto insurance premiums substantially. Here are some of these discounts by provider, but keep in mind this is only a small sampling of available discounts for auto insurance companies.

Discounts by Auto Insurance Provider
CompanyAnti-TheftClaim FreeGood StudentMarriedMembership/GroupMilitaryMultiple PoliciesMultiple VehiclesSafe Driver
Allstatexxxxxx
American Familyxxxxxx
Farmersxxxxxxx
Geicoxxxxxxxx
Liberty Mutualxxxxxxxx
Nationwidexxxxxxxx
Progressivexxxxxxx
State Farmxxxxxxxx
Travelersxxxxxxx
USAAxxxxxxxx
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But you’ll only get these discounts with a traditional auto insurance company.

Few, if any, auto insurance co-ops offer discounts. And because they only accept drivers with good records, you don’t get any benefits for remaining accident-free and won’t be eligible for any of the exclusive auto insurance deals for good drivers.

Little variation exists in what auto insurance co-op members pay.

Auto Insurance Co-Ops Insure Good Drivers Only

Traditional auto insurance companies are huge and bring in a lot of revenue each year. They have thousands of customers who pay their premiums every month but never file a claim.

These good customers give them a nice cushion to take a chance on drivers with less-than-perfect records. Such drivers pay higher premiums, but ultimately, their insurance costs are still subsidized to some degree by the drivers who pay premiums but never file claims.

Even if your driving record is shaky, you can find a traditional company willing to ensure you. Auto insurers check your driving record every time it renews, but the worst that will happen is likely a rate increase.

Auto insurance co-ops don’t have the luxury of taking a chance on high-risk drivers with imperfect driving records. Co-ops are usually small and don’t have thousands of members.

So, if you have a few tickets on your record or your FICO score isn’t the best, you may not be eligible to join a co-op. The average FICO score in the country is 703, but credit isn’t considered “poor” until it hits 579 or lower, according to Experian.

So if a co-op has a member it has to pay out on at an excessive level compared to the premiums received from that member, the co-op can encounter solvency issues. Co-ops tend to accept only drivers with good records.

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How To Get a Good Auto Insurance Deal

Even if you decide a co-op isn’t for you or you don’t qualify for one, you can get a great deal from a traditional auto insurance company. Doing so requires that you shop around between several companies and review your coverage every six months.

Also, don’t just consider the price. Look at the amount of coverage you’re receiving and any perks that the company offers. Check out each company’s Better Business Bureau rating to see what other customers think about doing business with them.

What is the best auto insurance company? That comes down to what’s most important to you, but you can definitely look at the company’s ratings to get a quick snapshot. See below for the top traditional insurers in the country, using data from the National Association of Insurance Commissioners.

Top 10 Car Insurance Companies by Market Share
COMPANIESA.M. BEST RATINGDIRECT PREMIUMS WRITTENMARKET SHARELOSS RATIO
State FarmA++ (Superior)$41.9 billion17.01%63%
GeicoA++ (Superior)$33.1 billion13.41%71%
ProgressiveA+ (Superior)$27.1 billion10.97%62%
AllstateA+ (Superior)$22.7 billion9.19%56%
USAA (Military Personnel & Family Members)A++ (Superior)$14.5 billion5.87%77%
Liberty MutualA (Excellent)$11.8 billion4.77%62%
FarmersA (Excellent)$10.5 billion4.26%61%
NationwideA+ (Superior)$6.7 billion2.73%58%
American FamilyA (Excellent)$4.7 billion1.90%69%
TravelersA++ (Superior)$4.7 billion1.90%60%
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The loss ratios here tell a story.

Loss ratios refer to the combination of claims paid out versus premiums charged to the customer.

For example, a loss ratio of $70 means that the insurer paid out $70 in claims compared to each $100 it received from charged rates. The best range for a loss ratio is somewhere between 45 percent and 75 percent, which all the major insurers are near to.

If this number is too low, they’re not paying out enough claims. If it’s too high, a rate increase may be coming in the future.

A.M. Best Ratings show the financial strength of a company, as you can see in this video below.

You can also check out a company’s J.D. Power ratings, which show how well their customer service is rated.

Can you get co-op insurance for any type of insurance policyc?

Do I need Co Op insurance for other things, and how much coop insurance do I need? You can get co-op coverage for more than just auto insurance, including co op life insurance, co op travel insurance, and even co op pet insurance. 

You can get co-op auto insurance coverage if you’ll be across the border for a while, also. Canada’s Co Operators Insurance has been around for more than 70 years, and there are other options as well. 

Enter your zip code into our free comparison tool below to find the best rate for the auto insurance you need, whether it’s a co-op or a traditional car insurer.

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