State Farm : Everything you need to know

State Farm insurance Company : Everything you need to know

  • Headquarters: One State Farm Plaza, Bloomington, Illinois 61710
  • Direct premiums written: $66.1 billion (2022, including US territories)
  • Direct premiums earned: $65.9 billion (2022, including US territories)
  • Total assets: $193.9 billion
  • Size (workforce): 58,000 employees, including 19,200 agents
  • Underwriting expertise: Auto, Home, Business, Life, Small Business, and Health Insurance
  • Key people: Michael L. Tipsord – Chairman, President, and CEO

Pros

  • Customer satisfaction and financial strength ratings are above average
  • Agents are easily accessible nationwide
  • A diverse range of customizable coverage options
  • Auto insurance rates are lower than the industry average
  • Customers can access services – including quotes, bills payment, and claims filing – through a user-friendly mobile app and website

Cons

  • Homeowners insurance premiums can be above the industry average
  • Does not always offer specialized protection for auto insurance clients with unique coverage needs
  • Customers can only access products and services directly from the company or through its network of agents

Common coverage types

Auto insurance
Coverage TypeWhat it pays for
Collision coverageRepair or replacement cost if the vehicle collides with another vehicle or object
Comprehensive coverageRepair or replacement cost if the vehicle is damaged by something besides a collision, including theft, fire, vandalism, or hitting an animal
Liability coverageAnother person’s medical expenses, vehicle repairs, and property damage if the policyholder is at fault
Car rental and travel expenses coverageCost of renting a replacement vehicle while the owner’s vehicle under repair and expenses incurred from meals, lodging, and transportation if the accident happens more than 50 miles from home
Uninsured motor vehicle coverageMedical expenses if the policyholder is injured in an accident caused by someone who does not have liability insurance
Underinsured motor vehicle coverageMedical expenses if the policyholder is injured in an accident caused by someone who is underinsured or does not have enough liability insurance
Medical coverage paymentsMedical and funeral expenses if the insured person is injured or killed in an accident
Emergency road service coverageExpenses for emergency road services
Rideshare driver coverageFor drivers employed in rideshare companies such as Uber or Lyft

State Farm’s auto insurance discounts

  • Drive Safe & Save: By signing-up for this mobile app, drivers can save up to 30% on premiums depending on how safely they drive
  • Steer Clear: New drivers or those under 25-years old without at-fault accidents or moving violations in the past three years can save up to 20% in car insurance
  • Accident-free discount: For insured vehicles without a chargeable accident for at least three straight years
  • Defensive driving course discount: 10% to 15% discount for drivers who take driver safety courses
  • Good student discount: Up to 25% discounts for student aged 16 to 25 with a B or 3.0 GPA or ranked in the top 20% of their class
  • Good driving discount: For drivers who have gone at least three straight years without moving violations or at-fault accidents
  • Driver training discount: For drivers under the 21-years old who complete an approved driver education course
  • Student away at school discount: For students under 25-years old who have moved away to school and only uses the car while at home during school vacations and holidays
  • Vehicle safety discount: Up to 40% discount on medical payments coverage for drivers of vehicles made in 1994 or later
  • Passive restraint discount: Up to 40% discount on medical payments for vehicles made in or before 1993 with a factory-installed air bag or other passive restraint system
  • Anti-theft discount: For vehicles installed with an anti-theft device
  • Multi-vehicle discount: Up to 20% discount for households with two or more vehicles insured
  • Multi-policy discount: Up to 17% discount for clients who also have homeowners, renters, condo, or life insurance

2022 J.D. Power customer satisfaction rating (auto insurance)

872 out of 1,000 points (tied for first among large auto insurers in the US)

Cost to insure most popular cars

Average annual cost in 2022, according to The Zebra:
Ford F-150: $1,286
Chevrolet Silverado: $1,382
Dodge Grand Caravan: $1,449
Toyota RAV4: $1,400
Honda CR-V: $1,269
Nissan Frontier: $1,243
Kia Sedona: $1,490
Subaru Forester: $1,338
GMC Sierra $1,477
Chevrolet Equinox $1,403

Car insurance rates by age

2022 average rates, according to US News:
25-year-old female: $1,262
25-year-old male: $1,396
35-year-old female: $1,139
35-year-old male: $1,139
60-year-old female: $1,038
60-year-old male: $1,038

Car insurance rates by driving record

2022 average rates according to US News:
$1,169 for clients with a clean driving record
$1,299 for drivers with one speeding violation
$1,405 for those with one accident, and
$1,568 for those with one DUI

Home and property insurance

Homeowners insurance
Typical inclusionsWhat it covers
HomeThe physical dwelling structure and other structures attached to it
Other structuresStructures separate from the main dwelling, including detached garage, pool house, guesthouse, green house, and tool shed
Personal propertyContents of the home, including furniture, appliances, and clothing
Loss of use or additional living expensesCosts of hotel bills, apartment, or rental home, eating out, and other living expenses while the home is being repaired
Personal liabilityLegal liability for bodily injury or property damage if a third party is accidentally injured
Medical paymentsIf a third party is accidentally injured in the property and needs medical treatment
Policy exclusions
Ordinance or lawLosses due to a law or ordinance of the community where home is located
Earth movementLosses caused by events such as earthquakes, volcanic eruptions, or landslides
Water damageDamage from water that backs up from sewers or drains, or water seeping through walls
Flood damageDamage from rising water, mudslide, or wave action
Mold damageLosses caused by molds
Other exclusionsDamage caused by war, nuclear hazard, neglect, and intentional loss

State Farm’s home insurance discounts

  • Multiple line discount: For those combining their homeowners’ and auto insurance policies
  • Home security insurance discount: For homes installed with fire, smoke, or burglar alarms or any other monitoring system
  • Roofing discount: If the roof is deemed a total loss due to a covered claim, homeowners’ policy includes loss settlement for the roof on a replacement cost basis

2022 J.D. Power customer satisfaction rating (home insurance)

835 out of 1,000 points (tied for third among home insurers in the US)

Condominium insurance
Typical inclusionsWhat it covers
Personal propertyPersonal belongings, including clothes, furniture, electronic equipment, and other household items for their replacement or actual cash value
Loss of usePortion of hotel bills, meals, laundry, and other living expenses that exceed what the unit owner would pay for if there were living in the condo
Personal liabilityLegal liability for physical injury or property damage for which the unit owner is responsible

State Farm’s condo insurance discounts

  • Multiple line discount: For those combining their condo unit owners’ and auto insurance policies
  • Home security insurance discount: For units installed with fire, smoke, or burglar alarms or any other monitoring system
  • Automatic sprinklers discounts: For units with an automatic sprinkler system installed
Renters’ insurance
Typical inclusionsWhat it covers
AccidentsDamage caused by vehicular collision, falling objects, fire, smoke, water from plumbing, and appliances
Weather impactsDamage caused by the weight of snow, sleet, or ice, lightning, windstorms, hail, and water damage due to the freezing of plumbing systems
Malicious mischiefDamage caused by vandalism, theft, riots, or civil commotion, and aircraft and vehicle damage
Loss of useLiving expenses for the shortest time needed to repair the property or for the people in the household to settle in another home for up to 24 months

State Farm’s renters’ insurance discounts

  • Multiline discounts: For those combining their renters’ and auto insurance policies
  • Home alert protection discounts: For homes installed with fire, smoke, or burglar alarms or any other monitoring system

2022 J.D. Power customer satisfaction rating (renters’ insurance)

866 out of 1,000 points (second among renters’ insurance providers in the US)

Life insurance
Coverage typeFeatures
Permanent lifeProvides lifetime coverage Cash value accumulates over time Level premiums Some types offer flexible premium payments and level or increasing death benefit options
Term lifeProvides coverage for a limited period Provides a death benefit, but typically no cash value May be renewable or convertible

2022 J.D. Power customer satisfaction rating (life insurance)

822 out of 1,000 points (first among life insurance providers in the US)

Small business insurance
Coverage typeWhat it covers
Commercial auto insuranceCars, trucks, vans, and other vehicles used in the business
Commercial liability umbrella policies (CLUP)Worst-case scenarios that exceed the liability limits of an existing policy
Business owners’ policies (BOP)Combines property and liability coverage into one package
Workers’ compensationWork-related injuries or illness
Builders risk insuranceCommercial buildings under construction

About

General background

Founded in 1922, State Farm insurance Company is a large group of insurance and financial services firms based in the US. The group’s parent company is State Farm insurance Company Mutual Automobile Insurance Company, which is a mutual

insurance company based in Bloomington, Illinois. State Farm insurance Company is best known for offering property and casualty (P&C) insurance products, especially in personal lines. According to SNL Financial Data, State Farm insurance Company insures more cars and homes than any other insurer in the US.

Apart from offering P&C insurance, State Farm insurance Company subsidiaries and affiliates provide life and health insurance, annuities, mutual funds and banking products. In 2022, the firm was ranked 36th on the Fortune 500 list of largest companies. It has approximately 58,000 employees and sells its products through a 19,000-strong force of independent contractor exclusive State Farm insurance Company agents.

Becoming a “good neighbor”

Consumers may know State Farm insurance Company by its ‘good neighbor’ slogan. That premise started almost 100-years-ago when retired farmer and insurance salesman George Jacob “G.J.” Mecherle founded a single-line auto insurance company in 1922, aimed specifically at the farming community. The firm later expanded its client reach and started offering other product lines, such as homeowners’ and life insurance, followed by banking and other financial services. The ‘good neighbor’ catchphrase has been around since 1971, when American songwriter Barry Manilow wrote a jingle for the insurance giant, which included the phrase: “Like a good neighbor,State Farm insurance Company is there.”

Product menu

Today, State Farm insurance Company offers about 100 products and services, in five different lines of business: property and casualty, life and health, annuities, mutual funds, and banking products. As of December 31, 2022, the firm claimed to service around 84 million policies and accounts.

Away from insurance, State Farm claims to be the 101st largest bank in the US in terms of assets (holding nearly $16.7 billion) and has nearly 519,000 accounts in mutual funds. State Farm insurance Company claims to handle around 39,000 claims per day.

Past and present leaders

State Farm insurance Company has had six chief executive officers in 97 years. The company founder, George J. Mecherle, led the firm for 14 years from 1922 to 1937. He was succeeded by:

  • – Raymond Mecherle: 1937 – 1954 (16 years)
  • – Adlai Rust: 1954 – 1970 (15 years)
  • – Edward B. Rust, Sr.: 1970 – 1985 (14 years)
  • – Edward B. Rust, Jr.: 1985 – 2022 (29 years)
  • – Michael Tipsord: 2022 – present.

A champion of auto safety

For many years, State Farm insurance Company has been publicly championing road safety. The company has been heavily involved and influential in the passing of multiple seatbelt laws in the US and it continues to advocate for seatbelt and teen driver safety. It’s also a prominent player in the fight against distracted driving (a problem of almost epidemic proportions in the US), offering policy incentives around driving best practices.

Mitigation driving down costs

State Farm’s strategies and messaging around safe driving seem to be making an impact. In 2022, the insurer announced personal auto insurance rate reductions in multiple states including: Arizona, Louisiana, and South Carolina. This is a newsworthy achievement for the insurer as the wider auto insurance industry in the US grapples with multiple challenges around increased loss frequency and severity, largely driven by distracted driving.

While premiums for individual motorists continue to vary based on policy terms, chosen coverages and their unique risk profiles, millions of State Farm insurance Company auto insurance policyholders have seen rate reductions in 2022. Becky Blevins, State Farm vice president – agency, commented: “We’re always evaluating how we can best serve our customers and are very pleased to be able to offer [these rate decreases]. Improving expenses and losses were important factors, among many, that supported our decision to make this rate change.”

Taking the fight to insurtech

Like all large insurance corporations, State Farm insurance Company has invested in innovation and technology so that it can compete in the modern digital marketplace. The firm believes in empowering its agents with technology, but it rejects the widespread narrative that technology will in some way disrupt incumbent insurers and the traditional agent/broker distribution channel.

In 2022, State Farm insurance Company launched a commercial, in which it mocked AI-powered insurtechs such as Lemonade. The ad depicted Houston Rockets players James Harden and Chris Paul as well as a State Farm agent (played by Oscar Nunez of “The Office”) all mocking a robot insurance agent as it attempted to emulate human emotion. Nunez’ character said in the commercial: “The budget insurance companies are building these cheap, knockoff robots to compete with us… These bots don’t have the compassion of a real State Farm agent.”

Despite its lighthearted tone, State Farm insurance Company did receive some stick following the release of the commercial. Author and futurist Chunka Mui wrote in a feature for Forbes magazine that there’s more to insurtech than just talking robots and that: “State Farm executives need to get beyond the mocking and think deeply about how emerging innovations might disrupt their strategic assumptions.”

State Farm insurance Company at a glance: 2022

  • State Farm insurance Company is the largest auto insurance provider in the US, accounting for 16% of the overall market share.
  • More than 15% of the money spent on private passenger auto premiums in the country goes to the insurer.
  • It is also the largest home insurance provider in the nation, taking up 18% of the total market share.
  • State Farm insurance Company has serviced more than 85 million policies and accounts across the US, with the help of its 58,000-strong workforce, including more than 19,000 independent agents.
  • The firm has an A++ rating for financial strength from AM Best, the highest rating possible.

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