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Allstate vs State Farm

Allstate vs State FarmAllstate vs State Farm is an interesting insurance company comparison. Both insurers are huge and offer great rates to their policy holders. Indeed, buying coverage from either company brings several customer benefits. Flexibility in choosing payment dates, coverage amounts that can be adjusted and adding coverage for other areas of life to receive a discount on the cost of insurance.

Both insurers offer auto, home owner’s and renter’s insurance, boat, motorcycle and life insurance. You can choose to have a single type of coverage or choose to bundle your coverage for your home owner’s and auto and save money. Allstate even offers retirement funding, college savings and supplemental health insurance.

State Farm was started in 1922 and currently it is ranked number 34 among Fortune 500 companies. It also has the largest number of clients offering them five lines of products and over 100 products and services. The “good neighbor”, State Farm currently has approximately 71.6 million policies in the United States and Canada. It is the largest insurer in the United States and one of the largest insurers in Canada.

In contrast, Allstate began offering insurance in 1931 and was originally owned by Sears, Roebuck & Company. In 1993 it became an independent company. Allstate is the number two insurer currently in the United States. They also offer insurance in Canada. Allstate’s “good hands” control 18% of the auto policies in the U.S.

Allstate vs State Farm both have allegations of improper handling of claims as should be expected with behemoth companies. Their sheer size would naturally expose them to attempts to deceptive and falsified claims. Allstate’s reputation was challenged after the Hurricane Andrew disaster in Florida in 1992. This resulted in an $825 million loss for Allstate. Allstate’s response to the loss was to not renew 300,000 Florida properties in high risk areas. This move precipitated Florida legislation which protected Florida homeowners and insurers from devastating losses suffered during disasters. Allstate was then able to renew 97% of its Florida policies.

Following the Florida hurricane disaster, California suffered a devastating earthquake. Northridge, California experienced an earthquake which resulted in claims of up to $1billion. Allstate was greatly affected by these claims. Again, Allstate attempted to stop writing policies in California. California responded by developing the state Earthquake authority to help pay for disaster costs in the wake of an earthquake.

State Farm has been embroiled in more class action suits than any insurer since Prudential in the ’90′s. Utah’s state appeals court found the insurer guilty of the destruction of client documents and awarded the plaintiffs $25 million in punitive damages. In 1999, the company paid out $1,186 billion for misleading customers about the quality of replacement parts used to repair vehicles. Another class action suit resulted in a payout of $200 million in punitive damages for misleading life insurance policy owners.

State Farm still has a good reputation which is evidenced by a renewal rate of 96% compared to an industry average of only 92.5%. This allegiance indicates that the majority of State Farm’s policy holders are content with their coverage and treatment. While Allstate is a different company with different client experiences, the same is true for their customer loyalty, plus Allstate incorporates systematic customer feedback management to stay in touch with its customer’s opinions of how they are being treated. This gives them the ability to make constant adjustments to their customer service, product line and sales process. To date with all the challenges they both have weathered, they are still the two best insurance carriers we have in the United States.