Allstate Insurance Summary
Allstate is the largest publicly-traded personal lines insurance company in the United States, and is second in size only to State Farm (private firm). They are headquartered in Northfield Township, Illinois, and currently employ over 35,000 people. Allstate’s primary sales force is made up of independent agents that do not actually work for the company, but rather act as independent contractors licensed to sell their products. Allstate has recently moved towards an “exclusive agent” program, which contractually prevents many agents from selling insurance for other companies.
Allstate was originally founded in 1931 by Sears, Roebuck & Co. and remained held by the organization until the 1990’s when it was sold off to the public. In 1999, Allstate purchased the personal insurance division of CNA Financial, and changed the name to Encompass Insurance Company. Allstate made headlines again when they purchased Esurance, an online-based car insurance company, in 2011.
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As the second largest auto insurance company in the United States, Allstate offers the same coverage types that the other big-name companies. This includes liability, collision, comprehensive, etc. They also have a handful of add-ons that are available with their auto insurance policies that are sold as “Amazing Features,” but as we see with many other companies, are more likely marketing tools to differentiate themselves from their competitors. Allstate breaks their policies down into four packages: Value, Standard, Gold, and Platinum. In order to qualify for more of these “Amazing Features” you have to upgrade packages. And yes, they do cost more.
Accident Forgiveness – According to their website, Accident Forgiveness can help to keep your rates from going up after an accident. The key word here is “can.” They invite you to talk to an agent to get more details about this feature, most likely because it varies by state. Accident Forgiveness is available on any insurance package except the Value Package.
Deductible Rewards – Policyholders who carry a Gold or Platinum Package can get the deductible rewards feature, which lowers their deducible for every year they go without an accident. The maximum discount is $500. Insurance is designed to prevent a major financial disaster after an accident, not cover a couple hundred bucks here and there. It also may prevent people from reporting smaller accidents because they are afraid of losing their “reward.” It is important to factor in the increased costs when determining if deductible rewards will end up paying for itself. There is no question the insurance company has done the math and knows if it is a profitable feature for them to add.
New Car Replacement – Purchasers of new cars can add this feature as long as they have a Gold or Platinum Package. If a car was purchased new and is less than three years old, Allstate claims they will issue a check for the new car replacement value, rather than the depreciated value. This is different than the traditional GAP insurance product, which covers the difference between the depreciated value of the car and what is still owed to the financing company.
Safe Driving Bonus – Policyholders who have a Platinum Package may qualify for a refund every six months if they were accident free during that time period. Allstate claims the payment could be up to 5% of the premium. What is important to pay attention too here is the “up to” part, which basically means anything between 0 and 5% is a possibility. If your policy costs $1000 a year, you may qualify for up to $25 every six months.
Drivewise – Allstate’s Drivewise is a usage-based car insurance program that tracks drivers individual habits and calculates discounts based on those metrics.
Allstate homeowner insurance policies are broken down into three main parts:
Structure – This part of the policy covers the home itself. It is similar to the collision aspect of your car insurance. Any damage that the home incurs will potentially be covered by this part of the policy. The structure coverage limit is generally separate from other pieces of the home insurance policy.
Personal Property – This aspect of the insurance policy covers the items found inside (in some cases outside) of the home. If a computer, for example, was stolen or damaged during a covered loss, the personal property part of the policy would more than likely pay for a replacement. This too has its own dollar limit.
Liability – If the neighbor’s kid is running through your lawn and steps on a rake, unfortunately, you as the homeowner can be held liable. Allstate’s home insurance policies generally include a section that addresses this liability and can help pay for legal and settlement costs that may arise.
Many Allstate agents are also licensed to sell life insurance to their customers. Allstate’s life insurance business sells the main types of policies found on the market today, including term life insurance, universal life insurance and whole life insurance.
When purchasing life insurance from anyone, make sure you fully understand the differences and what you are actually buying. Many people can save a lot of money and get proper coverage by getting a simple term life policy, but are often forced into more expensive (and higher commissioned) policies like universal and whole life. This is true across many different companies, so this is not an attempt to single out Allstate agents. It is typically more of an agent-specific issue rather than a company as a whole. Every person’s needs are different and require a customized solution, so anyone looking at life insurance should do their own research so they understand the differences before buying a policy.
Allstate Price (Rates)
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According to our rate quote test, Allstate’s monthly premium came in nearly 30% lower than the average rate we have received so far. This is consistent with what we saw last year running the same test, as Allstate was on the lower end of the price spectrum then as well. In fact, Allstate’s monthly premium is the lowest we have seen so far in 2013. Individual results may vary, so anyone interested in Allstate is encouraged to get a personalized quote.
The claims process for an auto accident is very typical, and offers three main ways to initiate one. First, you can call their phone number, 1-800-ALLSTATE and the help center can start a claim. Second, you can go on the website and start the claim yourself. Third, you can contact your agent directly and they can get your claim started. For most, the 1-800 number will probably be the best, since they are open 24 hours a day, 7 days a week.
Allstate’s claim process is very similar to the other large insurance companies. Once an estimate for the damage has been received, you are free to take your car to any repair shop you wish, or go to an Allstate recommended location.
Consumer Research and Complaints
When reviewing consumer opinion of Allstate as presented by Consumer Reports and JD Power, the overall sentiment is mixed but leans more towards the positive side. In 2010, a Consumer Reports Reader Study gave Allstate 85 out of 100, which translated to very satisfied. A JD Power study which focused on overall customer satisfaction gave Allstate 826 out of 1000, which was deemed to be below average. A study focusing on claims performed in 2012 by JD Power gave Allstate 4 out of 5 (better than most). And a recent study by JD Power which polled customers on the overall auto insurance purchase experience came in about average with 3 out of 5.
Allstate is currently not accredited with the Better Business Bureau and has an A rating. This is a big improvement over the C+ rating they had when we reviewed them in 2012. In the past three years there have been 1635 complaints closed with the BBB, 516 of which occurred in the previous 12 months. The vast majority of complaints were filed as “Problems with Product / Service.”
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Allstate is one of the largest insurance companies in the United States, and they offer just about every type of insurance an individual or family would need. For the past two years, our rate tests have shown them to be one of the lowest cost (in terms of premiums) auto insurance companies. Their consumer research results are mixed, but tend to lean toward the “above average” side. They offer a lot of fancy add-ons with their auto policies, so consumers should understand the details of each before accepting them. Overall, they appear to be a good company to check out when shopping for insurance, especially if you prefer working with an agent instead of buying it on your own.
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About the Author
I am a former insurance agent turned consumer advocate. My priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best place to get it.