State Farm vs AAA Auto Insurance
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UPDATED: Apr 1, 2019
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State Farm and AAA are two of the largest auto insurance companies in America offering a wide range of auto insurance coverage to drivers of many risk profiles.
Both companies have a significant market share and insure millions of policyholders however which auto insurance company should you choose?
About State Farm
State Farm is the largest auto insurance company in the United States. They control almost 20 percent of all auto insurance business in the country with tens of millions of policies.
State Farm is ranked number 35 of the Forbes 500 and was founded in 1922 by George Mecherle, in Bloomington, Illinois as a mutual insurance company with full ownership by auto policy holders.
Mecherle was a farmer turned auto insurance company founder, hence the name State Farm.
State Farm has more employees than any other insurance company in the United States, with upwards of 70,000 and has almost 40,000,000 existing automotive policies in the United States and Canada.
Read a full State Farm Auto Insurance Review
History of AAA Auto Insurance
AAA, or the American Automobile Association is a nonprofit car club that provides travel and automobile services to it’s members. AAA was founded as a motoring club in 1905 which aimed to promote development of roadways as well as road safety.
The company gradually turned into a powerful force lobbying for motorist rights and the development of the international highway system in the early 1950′s.
Eventually AAA diversified into auto insurance and they offer a great deal of discounts to people who are already members of the AAA car club. Unlike many other large insurers AAA insurance is sold under different names in different states under the AAA umbrella name.
In order to properly compare State Farm and AAA it is necessary to aggregate different ratings for all states to make sure that you can receive a clear picture of the quality of AAA automobile insurance.
Read a full AAA Auto Insurance Review
State Farm vs AAA Auto Insurance Policy Offerings
With regard to auto insurance policy offerings State Farm and AAA are nearly identical. Both offer very similar coverage plans, with standard programs like good grade discounts for teen drivers as well as safe driver bonuses. These addendums to policies have become more standard throughout the industry and State Farm and AAA are no exception.
There is little to distinguish between the two on policy offerings other than the fact that State Farm is a much bigger insurer and it is much easier to change your policy when your living situation changes, i.e move states or change vehicles.
State Farm also has many more agents and offices which can be very convenient when figuring out which policy is best for you.
Although their offerings are very similar State Farm comes up slightly ahead just because of the fact that they are nationwide and trade under a unified company name.
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Who has better auto insurance rates – State Farm or AAA?
The pricing differential between State Farm and AAA is not that great normally, but for people who are already AAA auto club members there are discounts offered, and if you are already paying the AAA auto club dues it makes sense to look into AAA discounts as they may give you a leg up on State Farm.
Aside from people who are already auto club members both companies have very similar pricing and premiums. State Farm also has somewhat standardized pricing throughout markets since they operate on a national level.
AAA insurance also operates on a national level but since their pricing is determined by the regional affiliate they are unable to offer standardized pricing in the same manner as State Farm.
State Farm vs AAA on Billing and Payment
There is little doubt, State Farm is by far the preferred choice of consumer ranking groups when it comes to Billing and Payments. JD Power and Associates 2011 rankings rate AAA’s aggregate score as two full stars lower.
This is due to the fact that since State Farm is such a large insurer that they have streamlined the processes of paying for premiums and have many customer service associates available nationwide, while AAA insurance is made up of a patchwork of different groups under the AAA name.
State Farm is also a single organization so they have control over a nationwide billing and payment system, and the infrastructure that comes with such a large task.
State Farm vs AAA on Contacting the Insurer
State Farm really shines when it comes to getting in contact with the company. Under the 2011 JD Power and Associates rankings this category is the highest rated for State Farm, coming in at four stars compared to an aggregate score of two for AAA auto insurance companies.
Again this is likely due to the large nationwide infrastructure that State Farm has set up for claims and the fact that State Farm operates in many states and must be available to deal with claims at all times.
So which Auto Insurance Company is better – State Farm or AAA?
In all rankings, both JD Power and Associates as well as the publication Consumer Reports rates State Farm far and above AAA. In all major categories such as Policy Offerings, Pricing, Billing and Payment and Contacting the Insurer State Farm ranks two stars higher in nearly every category.
There are some reasons one might want to consider acquiring AAA insurance, especially if you are already paying monthly dues as a AAA member but in terms of service and quality AAA did not compare. In the Overall Satisfaction rating State Farm wins four stars in the most recent JD Power and Associates compared to an AAA aggregate score of two.
Choosing an auto insurance company however should never be based solely on consumer reports or industry surveys. There are a lot of differences in consumer needs, local service and more where these results can only provide guidance but not necessarily reflective of the company in your region.
Ask around and compare auto insurance quotes from multiple providers before ultimately choosing an insurer.
Both State Farm and AAA are very good choices for auto insurance with a solid consumer reputation and strong financial ratings.