Wednesday, March 1, 2017

Why You Should Get Car Insurance from State Farm Rather Than GEICO

Unless you live under a rock you've been inundated with TV commercials touting GEICO car insurance. State Farm also runs a lot of TV ads but when you understand who owns the two largest car insurance companies in the United States it's pretty clear why you should get your car insurance from State Farm rather than GEICO.



As always, price out your car insurance and any other type of insurance you get but due the structure of the two largest car insurers in the United States it's easy to see why State Farm will almost always be the lowest cost provider. Here is who owns State Farm and GEICO.


Why You Should Get Car Insurance from State Farm Rather Than GEICO


  • State Farm

State Farm is currently the largest auto insurance company in the United States by far. State Farm has almost 20% of the auto insurance market and if you buy your insurance from State Farm you own the company.

That's right, State Farm is owned by its policy holders. There is no Mr. Potter from "It's A Wonderful Life" lining his pockets as the owner of State Farm. There are no stockholders clamoring for ever bigger profits and profit margins at State Farm.

On occasion, State Farm has paid out profits to its policy holders through checks in the mail. This author has gotten a few of those checks but that's not why you should get your insurance from State Farm.You should get your insurance from State Farm because common sense says they will always be the lowest cost provider because there are no stockholders or owners seeking ever high profits.

  • GEICO

GEICO is owned by Berkshire Hathaway which is controlled by its largest shareholder Warren Buffett. GEICO will never tell you in their commercials but Warren Buffett is the 3rd richest person in the world with a net worth of over $62 billion. Buffett trails only Bill Gates ($75 billion) and Amancio Ortega ($67 billion).

Warren Buffett did not get to be the 3rd richest person in the world by giving his customers the lowest possible auto insurance rates. Just by the ownership structure, GEICO will never be the lowest cost provider of car insurance in the United States because GEICO has shareholders including one main shareholder who want nothing more than to get richer and richer.

How do you think they will get richer and richer? 


Due to the structure of the two largest insurance companies in the United States it's clear that State Farm will almost always be the lowest cost provider in the markets they offer car insurance for. State Farm is owned by its policyholders. GEICO is owned by the 3rd richest man in the world. Who is going to give you the better deal?

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