If you’re perusing the web looking for State Farm Insurance Reviews, we’ve got some juicy insider information for you!
YES, State Farm Insurance is a household name.
When people first contact me, it’s one of the most recognizable insurance names out there.
…BUT does familiarity mean State Farm Insurance is the company for you?
State Farm Insurance - A Word or Two About the Company
State Farm is the largest seller of personal auto and homeowners insurance in the United States.
They also offer life insurance, small business insurance and retirement planning, but their bread and butter is auto and homeowners insurance.
State Farm Insurance uses a direct agent system to sell and service their policies, which means you work with an employee of State Farm.
The company has been around since 1922 and is very sound financially, so they will have the money to make good on your claim if and when the need arises!
Who Falls Into the State Farm Insurance Niche?
State Farm is a great choice for many homeowners, and I know a number of families that have really enjoyed using State Farm for their home and auto coverage!
Married couple with 2 kids, a dog, a cat. and a healthy mortgage, are often a good fit for State Farm homeowners and auto insurance.
If that’s you, then State Farm is probably a decent option.
That being said, if you’re single or a very high-income earner, there may be other options out there more suited to your needs.
What I Like About State Farm Insurance
You Get a Local Agent
This is a selling point, because you can develop a relationship with the folks at the agency and they can really get to know your family.
This allows them to better pinpoint your risk exposures as they change.
Why is this my #1?
Because one of the alternatives to a local agent is a call center. Most of the time, speaking with a call center agent, is like calling the IRS.
The hold times are horrendous, they might drop your call and nobody cares about you all that much because they won’t ever talk to you again.
So the chances that your agent will take ownership of your policy are very slim. Especially if your situation is complex, which is often the case with insurance!
This inevitably leads to a lot of frustration. GEICO and E-surance both come to mind when I think of insurers that use call centers. They sell policies primarily based on price, which works for a lot of people…
…but maybe not the best choice for you!
Most people want a good experience when they make a claim. Right?? Right!!
Modern Technology at Your Fingertips
Not into talking to your agent all the time?
Not a problem with State Farm Insurance. They have an awesome mobile app that does a pretty good job of allowing you to handle mundane tasks, such as proof of insurance, paying your premium or filing an automobile claim without hassle.
The app has object recognition, so you can just take pictures of the information needed for the claim process and it will auto-populate the claim filing screens.
Financially Big & Strong
State Farm Insurance is the largest provider of personal insurance in the US.
This means they’re financially able to withstand a lot of claims activity. In the wake of a major disaster, they can deploy the claims adjusting resources needed to help their customers.
Most folks think about the up front premium cost when they buy insurance. A savvy buyer considers not only the cost of premiums, but also how their family is going to fare after an accident or horrible disaster.
Having a financially stable insurance provider with the resources to respond to an avalanche of claims should be part of the decision making process.
State Farm Insurance checks this box for you.
Why I'm Not Thrilled About State Farm Insurance
The Use of Aftermarket & Refurbished Replacement Parts
Here’s the scenario…
You’re in stop and go traffic one morning on the way to the office. Everyone throws on their breaks, except for the guy directly behind you. He’s looking down at a text from his girlfriend, rather than the road in front of him.
He smashes his 1994 Geo Metro into your trunk and pushes your nice new car into the bumper of the SUV in front of you. So you’re the meat in an accident sandwich.
Ironically, the guy with the Metro isn’t insured, so you turn to State Farm Car Insurance, the company that issued your policy.
Your front end needs a new radiator, headlights, grill, and fan assembly. The good news is, you have uninsured motorist coverage for such events. So State Farm will pay to have it “fixed”.
The bad news is, they probably aren’t going to give you original manufacturer’s parts. So your new car is not quite so new anymore and the resale value just plummeted.
This is because State Farm Car Insurance policies specifically state that they don’t have to give you OEM parts. Instead they can give you aftermarket or even used parts to fix your car.
This is a cost saving technique for them, but a total bummer for you.
JD Power Gives Them 2.5 Out Of 5 Stars
Not too hot, not too cold – kind of like mama bear’s porridge.
I guess that’s okay, but if I’m going to drop a few thousand bucks a year on a promise, I want that promise to come from a company who gets at least 3 or 4 stars.
Your Agent is an Employee of State Farm Insurance
Your agent is an employee of State Farm Insurance.
This is a pro and a con.
On one hand, State Farm Insurance is forced to accept liability for whatever their employee tells you in writing.
Which means if you ask if a certain event is covered and their agent says “yes” via email or letter, State Farm is on the hook to cover that peril or cause of loss.
On the other hand, you can’t have a private conversation with your agent. This is a bummer if you want to get real advice, that won’t get back to State Farm, about how to deal with an insurance related problem.
Remember: you’re entering into a business relationship with your insurer when you buy their policy. They will always remember this fact. This is a hard concept to heed when you make a claim, because you’re emotionally involved in the situation. They aren’t.
Having an insurance expert who’s on your side, but emotionally detached from your situation is a great asset when the chips are down.
What to Ask a State Farm Insurance Agent
In closing, keep a couple things in mind when talking to a State Farm agent:
Ask them how long they've been a licensed insurance agent...
I like agents with at least five years of experience. You learn a lot on the job in the insurance business. You want an agent who has been around awhile. Ask a lot of questions to make sure they know their stuff.
Ask questions about rebuilding costs when you get a homeowners quote...
Quite often, agents are unaware of the current cost to rebuild.
Unfortunately this lack of information may lead them to accidentally sell you a policy that underinsures your home. This won’t work out well if your place burns to the ground.
Recently in California, many home owners felt this pain when they were forced to pay out of pocket for a portion of their home’s rebuilding costs for exactly this reason. Most of the homes in Santa Rosa and Santa Barbara were underinsured. Now homeowners are left with less money than they need to rebuild.
Remember: Insurance is a business and your claims adjuster will review your policy (which is a contract) to see how much they owe you. This is nothing more than a business transaction for them, nothing personal.
If you’ve recently undertaken a home remodeling project or soon will, be sure to tell your homeowners insurance company about the updates to determine whether you need to purchase more insurance reflecting your home’s increased value. Homeowners: Don’t Make This Common Insurance Mistake, Morningstar.com
Ask about Building Ordinance Coverage
This coverage pays for the undamaged portion of your home to be brought up to code.
Claim example: Your home was built in 1952. Your son leaves a burner on and somehow the kitchen catches fire. Cabinets and countertops are burned and your home has a lot of smoke damage.
This is a relatively small claim. However, during restoration, the building code inspector comes and sees that your electrical system is out of date and needs to be upgraded to current code.
Since the electrical system isn’t part of the fire damaged area, you have to either pay out of pocket for this upgrade, or have enough Ordinance or Law coverage on your policy to cover it.
Remember: insurance is meant to return your home to the state it was in prior to a loss, not improve your home. The only way your policy pays to have this “betterment” completed is to have enough Ordinance or Law coverage on the policy to begin with.
If your home is severely damaged due to a fire, you may not have enough insurance to rebuild your home… even if you have replacement coverage! How can that be? Simple. Your homeowners policy covers rebuilding your home to the “same quality” and “similar materials” that existed before the fire. Your policy specifically limits or excludes the cost to rebuild to new building codes. It will also not pay for demolition of undamaged parts of your home. Bruce Sackrison’s Insurance Matters: Why you need ordinance or law coverage, Napa Valley Register
State Farm Insurance - The Bottom Line?
If you're a looking for a State Farm Insurance Quote, my best advice is to shop around.
As you can see, State Farm Insurance has some very strong pros and CONS.
Every life insurance company has positive and negative attributes and State Farm Insurance is no different.
If I were you, I'd employ the services of an independent insurance agent.
They will go through the ins and the outs of the company you are considering to see if they are the BEST insurer for your personal circumstances.
A seasoned agent will be able to connect you with the RIGHT insurance company…
Which MAY or MAY NOT be State Farm Insurance.