Co-op Car Insurance (Definition + Savings)

Co-op car insurance uses all the resources from a group of people to get a better deal on car insurance. You may qualify for it if you have a good driving record.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Apr 20, 2021

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Here's what you need to know...

  • A co-op is a group of people who work together to benefit the group as a whole
  • You must have a clean driving record to qualify
  • Co-op insurance may not save you money compared to traditional insurance companies

Cheap car insurance co-ops are an alternative to traditional car insurance coverage. The insurance groups combine the resources of many people to try to get access to a better deal on insurance.

The following article will provide you with additional information about how it works, including whether or not it saves you money.

Compare the cost of various car insurance rates for FREE with your ZIP code at the top of this page.

What is Co-op Insurance?

It is a group of people working together for the good of the group, an idea that has been around for many years. There are stores, farms, and living situations that still work by the idea of cooperation.

Traditional car insurance uses a portion of the money paid through each policy holder’s premium to pay employees and executives at the company.

Since a portion of each premium is put towards future claims that will be paid out by the insurance company, premiums must cover the cost of overhead.

There are no executives, only other members serving in leadership positions. Typically a board of members makes important decisions.

There are some employees but they are limited to adjusters, operators, and clerical workers who are paid an average salary.

A co-op car insurance company is not in the business to make a profit.

So, if it’s not for profit, what is my excess payment going toward? After paying employees, all money goes into a fund to pay for the car insurance needs of the members. Because of this, premium rates remain fairly low.

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Does a car insurance co-op really save you money?

The main question is does a car insurance co-op really save you money?

There are many things to consider when answering this question.

For example, it typically does not offer discounts.

Traditional car insurance companies offer numerous discounts such as:

  • Student discounts
  • Safe driver discounts
  • Safety device discounts
  • Anti-theft device discounts
  • Military discount
  • No accidents discount

These discounts may save you more money than a co-op depending on what discounts you qualify for.

This table shows a sample of available discounts by insurer.

Common Car Insurance Discounts Offered by Companies
CompaniesAnti-TheftClaim FreeGood
Student
MarriedMembership,
Group
MilitaryMultiple
Policies
Multiple
Vehicles
Safe
Driver
Allstatexxxxxx
American Familyxxxxxx
Farmersxxxxxxx
Geicoxxxxxxxx
Liberty Mutualxxxxxxxx
Nationwidexxxxxxxx
Progressivexxxxxxx
State Farmxxxxxxxx
Travelersxxxxxxx
USAAxxxxxxxx
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Discounts are an important feature that traditional car insurance companies use to gain customers.

Co-ops also don’t take into consideration the type of vehicle, vehicle condition, where you live, and how often you drive.

Depending on your answers to these variables, a traditional car insurance company may raise your premium or lower it.

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Why are co-ops so small?

Co-op car insurance companies are small because the larger a company gets, the more overhead and expenses are involved.

The whole point is to save its members money. If co-ops begin to expand, they will typically divide into smaller ones to cover particular areas and still meet demands while staying small.

The service within is not as all inclusive as with a traditional car insurance company.

Though co-ops still have insurance adjusters for accidents and individuals to answer the phone when questions arise, there typically is not a 24/7 mentality as there is with large traditional companies.

All the major needs are still met, the response just may not be as quick and efficient as with a large company.

How do I make a claim on my Co-op car insurance?

Much like traditional insurers, these co-op car insurance companies often have online options. The car insurance claims process is similar to a traditional insurer’s.

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What are my other alternatives for traditional car insurance?

For most individuals, a traditional car insurance company is going to be your only choice. And you can certainly do a lot to find cheaper coverage.

But the best way to save is to shop around. You can find a list of the top-rated companies at J.D. Powers, or you can use sites like the Better Business Bureau or A.M. Best to check up on car insurance companies.

In some cases, you will find that your state participates in a state-funded insurance program. These programs are often reserved for individuals who cannot get car insurance from a traditional source because they have such a bad driving record or have multiple driving convictions.

In some states, you can opt for alternative car insurance, such as a bond that shows you can be responsible for paying for the damage from the car accident. These bonds aren’t cheap, often requiring $10,000 or more to cover the cost.

In order to weigh your options, you have to know what is available.

If you’re sick of Allstate, Chubb, Progressive, or State Farm, co-op insurance coverage might be for you. But if you don’t have the best driving record, you can still get discounts and shop around for cheaper coverage.

How much is co-op insurance? To get a quote on car insurance, try using the online comparison tool.

Start with your ZIP code in the FREE tool at the bottom of this page and get car insurance quotes today if you’re interested in co-op coverage.

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