AAA vs. State Farm: Who has the better coverage?

AAA and State Farm are both highly recognizable names in the auto insurance industry, each one with its own particular merits.

There are distinct differences between the two. For example, State Farm has considerably more media presence than AAA, which prefers a more subtle profile.

As you study comparison reviews, you will find different opinions on the two companies, as well as different coverage and discount options.

It’s always wise to obtain quotes from each potential insurer to help determine which provider best fits your needs and budget.

Aside from that, good research practices should also include comparing reviews and ratings between State Farm vs. AAA to get a glimpse of how well each company serves its policyholders.

We’ve built this review to make it simple for you to compare the two insurance providers using several factors: coverage and benefits, customer experience, financial strength, cost, and available discounts.

We’ve used both companies’ equipment, monitoring, reputation, contract and price, and technology integrations as part of our review.

AAA vs. State Farm: Who Wins The Coverage Fight?

AAA vs State FarmAs you’re comparing AAA vs. State Farm, you can see that while their policy offerings are similar, there are subtle variations in each of the two companies’ coverage options.

For instance, AAA offers personal injury coverage, which is required in some states, whereas State Farm provides a towing and labor add-on that can help alleviate complications that may arise while traveling.

What Are Customers Saying?

After drivers spend some time reviewing insurance options and choosing the right coverage options with an AAA or State Farm representative, not much further interaction occurs between the policyholder and the insurance company. When it does, it’s usually during the claims process.

This is why there is so much emphasis on claims processing in customer satisfaction studies.

The J.D. Power Claims Satisfaction Report compares insurance providers using honest reviews and ratings from real customers. It ranks companies such as AAA and State Farm, as well as their competitors, using eight key performance indicators (KPIs).

All of the KPIs used to determine rankings pertain to the claims process and fall under three super KPI categories: communication, ease of service interaction, and timeliness.

In J.D. Power’s 2017 Auto Claims Satisfaction Study, the national AAA wasn’t ranked.

However, Automobile Club of Southern California, an affiliate of AAA, was. To provide an accurate comparison between AAA and State Farm, the Southern California results will be analyzed in this review.

Automobile Club of Southern California was given an overall customer satisfaction rating of 3 out of 5 stars.

It placed just above Met Life and Travelers and just below Progressive and Esurance. State Farm was rated 3 out of 5 stars for overall customer satisfaction. This set that company just below significant competitors MAPFRE and GEICO, and just above Allstate and Nationwide.

The rating for each company is considered just above average.

Overall Satisfaction Satisfaction with Initial Claims Reporting Process Satisfaction with Representative Handling the Claim Satisfaction with the Repair Process Satisfaction with the Rental Car Process
Auto Club of Southern California 3 out of 5 stars 3 out of stars 3 out of 5 stars 2 out of 5 stars 3 out of 5 stars
State Farm 3 out of 5 stars 3 out of 5 stars 3 out of 5 stars 3 out of 5 stars 3 out of 5 stars

To determine a rating for each company’s level of overall customer satisfaction, it’s important to consider elements beyond just the claims process, including the way each company communicates essential information to its policyholders, and how it responds to inquiries and complaints.

The J.D. Power Auto Insurance Study took the aforementioned elements into account to create an impartial picture of how companies such as AAA and State Farm compare. It ranks the affiliates of AAA vs. State Farm and other major insurance providers against each other to determine which provides the best customer experience.

AAA again was not included in this study, so for this review, we’ll use the ratings assigned to Auto Club of Southern California. Auto Club of Southern California received an overall customer satisfaction rating of 3 out of 5 stars; State Farm was given the same. These scores indicate above-average customer satisfaction levels for both companies.

Auto Club of Southern California was given 3 out of 5 stars in all five of the individual categories that make up this rating, except for local agent, for which it was rated 4 out of 5 stars. State Farm came out with a slightly lower ranking. It was given 3 out of 5 stars in the categories of policy offerings, local agent and call center representative. However, the company received 2 out of 5 stars in the pricing and insurer website categories.

As California is the most populous state in the U.S., the California Complaint Ratio Study is commonly used to give consumers an understanding of the customer satisfaction level of each insurance provider.

Over any given year, this study compares the number of justified complaints each company has received in the state with its approximate claims exposure, or the number of vehicle policies held by each company, to calculate a complaint ratio.

Neither AAA nor any of its affiliates submitted complaint data to be included in this study. State Farm, however, did submit its data. The company received 120 justified complaints in 2016. When compared with a total claims exposure of 3,852,920, the insurer was assigned a complaint ratio of 3.1 per 100,000 policies. While this may seem high,  State Farm received fewer than the average number of complaints, which for this study was 5.6.

The National Association of Insurance Commissioners (NAIC) collects data on customer complaints on a national level.

The organization establishes complaint ratios based on a national median of 1.0, indicating that any company with a complaint ratio of more than 1.0 has received an above-average volume of complaints. AAA is below average with a complaint ratio of 0.64 (based on complaints vs. premium dollars), while State Farm is considerably higher at 2.58.

Comparing AAA vs. State Farm Financial Strength

Assessing the financial strength of an insurance company isn’t often the first thing we think to do as we compare companies such as AAA vs. State Farm, but it’s an important factor to evaluate. If a company is unable to back its policies in the event of a major disaster or if a high volume of claims is filed, it’s not the right company to buy a policy from.

Comparing the financial strength of AAA and State Farm can be done by obtaining credit ratings from one of the five major rating agencies: Moody’s, A.M. Best, Standard & Poor’s, Fitch Ratings or Kroll Bond Rating Agency.

A.M. Best’s rating of AAA is “A+,” which indicates a strong financial outlook for the company. State Farm’s Financial Strength Rating from A.M. Best is even better at “A++,” while its rating of “aa1” from Moody’s indicates that State Farm has a superior financial standing.

Pricing and Discounts

Just as the cost of insurance can increase depending on the driver’s age, gender, geographic location and driving history, prices can decrease when drivers meet certain criteria set out by their insurance provider.

Although not all companies offer discounts to drivers, State Farm and AAA offer a variety of discounts to encourage good driving and vehicle safety among their policyholders.

When comparing AAA vs. State Farm’s discount offerings, AAA comes out ahead with more options.

Here’s a rundown of each company’s discounts:

AAA STATE FARM
Multiple Vehicle YES YES
Multiple Policy YES YES
Vehicle Safety YES YES
Good Student YES YES
Student Away from Home NO YES
Completed Driver Training Course NO YES
Completed Safe Driving Course NO YES
Safe Driver YES YES
Homeowner YES NO
Annual Mileage YES NO
Group, Union Organization Savings YES NO
Pay in Full YES NO
Automatic Payment YES NO
Anti-Theft YES YES
Accident-free Driver NO YES

After reading the above reviews and ratings and comparing the two companies, you should have a better idea of how they compare to each other and to the major players in the auto insurance market.

Use this information to make the right decision about which provider can offer you the best policy for your needs, and read more about comparing car quotes in this post.

*While we make every effort to keep our site updated, please be aware that “timely” information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Huntley Wealth & Insurance Services and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser.