Survey: Allstate Car Insurance Premiums Cost 24.3% More than State Farm

by Andrew Evans | Automobile.com | 6/29/2012

Are car insurance policyholders in good hands with Allstate? Or would they rather have a good neighbor like State Farm? Moving beyond the catchy advertising slogans and creative marketing, Automobile.com survey participants and customers of the two aforementioned insurance companies were asked how much they spend on coverage each year. As it turns out, Allstate policyholders report paying $996.19 for insurance compared to $801.63 spent by State Farm policyholders. This $194.56 difference translates into Allstate policies that are 24.3% more expensive on average than rival State Farm.

Perhaps the most significant difference between the two companies that could contribute to the cost disparity has to do with policyholder age. Allstate customers are 2.69 years younger than State Farm customers, with respective average policyholder ages of 46.21 and 48.90. In an era where discrimination based on age is generally frowned upon or legally prohibited, it is a common factor insurers use to determine the cost of a policy. Allstate informs users of their website that drivers under 25 (particularly unmarried males) will usually face higher insurance premiums.

Additionally, Allstate policyholders report driving more on average than State Farm policyholders. Miles driven is another significant data point insurers use when pricing their policies. 16.32% more Allstate drivers report driving 21 or more miles daily compared to State Farm drivers. More time spent on the road typically increases the chances of being in an accident, hence the higher prices for those who drive more.

Age also plays a factor in the specific vehicles that are insured by either company. The survey revealed vehicles insured by State Farm are approximately one year older on average than Allstate-insured counterparts. This might lend support to the argument that older vehicles are generally less expensive to insure than newer models due to repair or replacement costs. Since newer vehicles are often valued higher than their previous model years, parts can cost more.

To better understand the factors that lead to cost disparities among insurers, we examine the type of coverage each policyholder buys to see if there are any significant trends. We do this by dividing coverage levels into four categories: state minimum coverage, basic coverage, standard coverage and superior coverage.* Each coverage level group represents an ascending level of protection. Unlike a recent survey comparing Progressive and GEICO, the specific type of coverage didn't contribute to the cost disparity between Allstate and State Farm.

The fact that State Farm insurance policies are cheaper on average seems to be helping the company's sales figures. According to the survey, State Farm holds a larger market share of U.S. car insurance policies than Allstate at 18.7% to 10.2%, respectively.

If you are looking to reduce your car insurance premiums but want to maintain sufficient coverage, it is a good idea to compare quotes from a nonbiased source that is not affiliated with any specific insurer. Automobile.com allows drivers or prospective car buyers to compare quotes by filling out one simple form without obligation to buy.

* Car Insurance companies typically display coverage amounts using three figures. For example, basic coverage ($50,000/$100,000/$25,000 or 50/100/25) would protect as follows: $50,000 in bodily injury liability for an individual, $100,000 for all injured parties in a single accident and $25,000 maximum for property damage liability in a single accident. Automobile.com is an independent auto insurance resource website. Automobile.com is not advertising on behalf of any companies listed or mentioned on the website.