Pros Explained
- Discount and perks for Costco members – While you don’t have to be a Costco member to purchase a homeowners insurance policy from American Family Insurance, Costco members enjoy a discount. A few perks include lock replacement, food spoilage protection, and stolen card protection.
- Competitive insurance rates – A major draw to purchase homeowners insurance from Costco’s third-party insurer is that you’ll probably get a competitive rate.
Cons Explained
- Not a wide network of local insurance agents – The perks of working with a local insurance agent is that they’re usually able to provide quotes and answer questions quicker. They can also help you tailor your policy so it’s in step with your particular needs. While American Family Insurance does have a network of agents, it’s only 2,400 strong.
- Below average customer satisfaction rating – According to the National Association of Insurance Commissioners (NAIC) Complaint Index, American Family received a lower rating than its competitors in the insurance space. The customer complaints were primarily related to claims.
Costco Home Insurance Coverage Plan
Whether purchasing a carton of eggs or set of new car tires, Costco’s members receive a discount when they shop through the nationwide wholesaler. Costco works with a handful of third parties to extend its services and offerings to customers. Those who are shopping for a homeowners insurance policy can expect the same.
Through the CONNECT program, you can get a quote for a policy through Costco’s partner American Family Insurance. You don’t need to be a Costco member to purchase a homeowners insurance policy, but Costco members get a discount and benefits. Here’s what you can expect with Costco’s standard home insurance policy:
- Dwelling Insurance – This covers the cost of damages to your home under a covered peril, such as damage from hail, lightning, a fire, vandalism, or an object falling onto your home. Besides the actual structure of your home, it also can cover an HVAC system, plumbing, heating, and electrical wiring. Attached structures—think garages, an attached fireplace, porch or deck—might also be covered.
- Other Structures Insurance – This covers other structures on your property that aren’t attached to the structure of your home. This could be a mailbox, gazebo, shed, or garage. It could also include personal belongings in the trunk of your car or a storage unit. There are coverage limits, typically 10% of the dwelling insurance limit. So if your dwelling insurance limit is $200,000, other structures insurance will foot the bill on expenses up to $20,000.
- Personal Property Insurance – Should your personal belongings get damaged, lost, or stolen, this type of insurance can get them replaced or repaired. As for what exactly is included, it’s typically clothing, furniture, appliances, and sporting goods.
- Earthquake Insurance – If you live in a part of the country where there are earthquakes, this can cover damages and loss to your home—both attached and unattached structures—and personal property.
- Mine Subsidence Insurance – If your home is built on a land mine, then mine subsidence insurance could help cover the cost to replace or repair your damaged home should the land shift underneath. The states of Illinois, Ohio, Kentucky and West Virginia require insurance providers to offer this type of coverage.
- Loss-of-Use Insurance – Should your home be uninhabitable due to a covered peril and you need to temporarily uproot, this will cover the cost of staying in a hotel or an Airbnb while your home is getting repaired. It can also cover the cost of additional expenses, such as eating out because you can’t access your kitchen.
- Personal Liability Insurance – Let’s say you or a member of your household are responsible for a personal injury or accidental damage to someone else’s property while at your home. Personal liability insurance can cover legal fees and the costs to repair any damage.
- Medical Payments Insurance – If a guest gets injured on your property or if you accidentally injure someone else while they’re on your property, this could help pay for expenses. This is “no-fault” insurance, which means that the policy can cover expenses no matter who was responsible for the injury.
Factors That Affect Your Cost
While each insurance company may use slightly different criteria, here are the factors they generally consider when determining your rates:
- Property Location – Homes near a body of water, such as along the coast, generally cost more to insure. Also, if you live in an area that’s prone to wildfires, your insurance will likely be more expensive.
- Roof Condition – The better your roof’s condition and the newer it is, the lower your premium will likely be.
- Home Characteristics – The size of your home, the materials it’s made of, and if you have a trampoline in the yard or a wood-burning stove in the kitchen all affect the cost of your premium.
- Claims History – Statistically, if you’ve filed claims before, there’s a greater likelihood that you’ll file a claim in the future, which could bump up the cost of your insurance, as could filing the same claim multiple times.
- Home Security Systems – The greater your investment in protecting your home and belongings, the less expensive your policy. We’re talking about installing a home alarm, indoor fire sprinklers, deadbolts, or a security camera.
- Dog Bites – If there’s a history of reported dog bites on your property, your policy will probably be costlier.
- Credit History – Your credit history doesn’t just affect your ability to get financing; it also affects the cost of your insurance. The stronger your credit score, the lower your premium.
- Home-Based Business – Because having clients or customers visiting you in your home increases the likelihood of an accident happening, this could potentially up the cost of your policy. And while some of the equipment and supplies for your home-based business might be included in a standard homeowners insurance policy, not everything will be.
Costco Home Insurance Discounts
American Family Insurance offers the following policy discounts:
- Claims-Free Discount – If you haven’t had to file a claim in the last five years, then you might be eligible for a discount on your premium. This is only available in certain states.
- Home Security Discount – Anything you install to boost the security of your home—a smoke detector, fire sprinklers, security camera, or deadbolts—could reduce your monthly premium.
- Tenure Discount – American Family Insurance rewards its customers for being loyal. Every year you stay with the company, you’ll receive a discount on your policy.
- Multiple Policy Discount – Bundle your policy with other American Family Insurance products, and you can get your rate reduced.
- Renovation Discount – Invest in your home by way of improvements to keep it modern and in tip-top shape, and American Family Insurance will lower the cost of your policy. The availability of this discount varies by state and could include roof replacement and updates to the plumbing or the electrical system in your home.
Perks for Costco Gold Members
You don’t have to be a Costco member to purchase a homeowners insurance policy with American Family Insurance. However, only Costco Gold members (Costco’s standard membership level) purchasing homeowners insurance from American Family through CONNECT can get the following perks:
- Member Discount – You get a discount simply for being a Costco Gold member.
- Identity Theft Protection – The homeowners insurance policy includes built-in identity theft protection to protect yourself against would-be fraudsters.
- Stolen Credit Card Protection – Should your credit card get stolen, your homeowners insurance might be able to cover losses for unauthorized uses.
- Lock Replacement – Lock replacement coverage can make sure your home is secure after a break-in or theft.
- Food Spoilage Protection – If your food gets spoiled from a power outage during a storm or an equipment failure, you might be able to get reimbursed.
Perks for Costco Executive Members
The following two perks are only available to Costco Executive members (a higher membership level than Gold):
- Glass Repair Reimbursement – In the event that an event broke or shattered windows in your home, this will pay to have them replaced. It will cover up to two occurrences over a 12-month period, and each occurrence will be covered up to $1,000.
- Home Lockout Assistance – Lost your keys and locked out of your home? This service is available to help you around the clock, and you’ll be covered up to $100 per occurrence, limited to two occurrences within a 12-month period.
Costco Home Insurance Availability
Costco doesn’t offer homeowners insurance in the following states: Alaska, Florida, Georgia, Louisiana, Maine, North Dakota, Rhode Island, Texas (only some counties, not the whole state), West Virginia, and Wyoming. While homeowners insurance is offered in the remaining states, particular insurance products might not be available.
Other Insurance Provided by Costco
Here are one add-on and four endorsements that you can attach to your standard homeowners insurance policy:
Add-On
- Scheduled Personal Property – For high-value items such as jewelry, memorabilia, firearms, stamp or baseball card collections, cameras, computers, fine art, and collectibles, you usually need separate coverage. Scheduled personal property is a type of add-on that you can purchase after you sign up for a standard policy.
Endorsements
Endorsements include additional coverage for:
- Water Backup and Sump Overflow
- Home Media Equipment
- Adventure Equipment
- Personal Injury
Costco Customer Service
You can speak to a member of the customer service team by calling 866-363-6153 Monday through Friday from 8:30 a.m. to 7 p.m. CT and Saturday from 7 a.m. to 10 p.m. CT. Customer service is closed on Sunday.
You can also get in touch with a human by emailing [email protected]. Be sure to mention reference number 8A7, which lets American Family Insurance know you are going through Costco.
According to the National Association of Insurance Commissioners (NAIC), American Family Insurance has a 2019 complaint index of 1.36, which is higher than the industry average of 1.0. However, if you filter just for homeowners insurance, the index drops to 0.72, which is below average.
In 2019 there were a total of 64 complaints regarding homeowners insurance, which was an increase from 54 in 2018. There was not enough information given to determine the reason for the increase. The top complaints were state-specific, had to do with claim handling, and concerned an unsatisfactory settlement or offer, delays, adjuster handling, and claim denial.
How to Make a Home Insurance Claim With Costco
To file a claim with Costco, you’ll need to give American Family Insurance a call and provide facts and details about the damages and/or loss. From there you’ll be assigned a claims representative, who will work with you on the claims process.
Costco Home Insurance Cancellation Policy
You can cancel your homeowners insurance policy at any time. Your policy will be prorated, and any money you paid ahead of time for the billing period will be refunded.
Other Insurance Provided by Costco
Whether you’re a Costco member or not, other types of insurance are also provided by American Family Insurance, and they include:
Get a Costco Homeowners Insurance Quote
You can get a homeowners insurance quote through American Family’s CONNECT website. Have on hand basics about the property you’d like to insure, along with details about the dwelling and your personal information.
Verdict
Costco’s homeowners insurance can be a strong choice if you’re a Costco member and looking for an affordable policy. There are also some added benefits that make purchasing insurance through the wholesaler attractive.
However, American Family Insurance doesn’t have a vast network of local agents. The benefits of working with a local agent are that they can more easily inform you of options where you live, make changes to your policy, and gather quotes.
Compare Other Home Insurance Reviews
While you can get an affordable, competitive rate on homeowners insurance through Costco, it might not be the best rate or the best option for your needs. Shop around and see which providers offer the right coverage for you.
Methodology
Investopedia is dedicated to furnishing consumers with unbiased, comprehensive reviews of homeowners insurance providers. We reviewed each insurance provider’s coverage options, available discounts, customer services, and satisfaction ratings to ensure that our content helps users make the right insurance decision for their needs.
