Co-Op Auto Insurance (2024)

An auto insurance co-op offers an alternative to buying auto insurance from a traditional company. However, not every driver qualifies for co-op auto insurance coverage.

The following guide can help you decide if joining an auto insurance co-op is right for you. We also provide information on how to ensure you get the best deal no matter what type of auto insurance you choose.

How Co-Op Auto Insurance Works

What is co-op insurance? A co-op is a group of people who work together for each other’s benefit. There are co-ops for many different things, including housing, jobs, and auto insurance. They offer similar services and conveniences, like the ability to pay co-op insurance online with a co-op portal login. 

A co-op’s small size leaves it more vulnerable to risk than a traditional auto insurance company, so they usually don’t accept drivers with spotty driving records. Also, they rarely offer discounts on premiums, such as good student or multi-car discounts.

Auto insurance co-ops operate differently from traditional auto insurance companies in a few important ways.

Auto Insurance Co-ops Have Fewer Expenses

With traditional auto insurance, customers’ premiums represent the company’s revenue. The company, like any business, pays its expenses from this revenue.

Some of these expenses are claims paid out to customers who have car accidents or otherwise receive vehicle damage.

However — and this is where traditional auto insurance companies differ from co-op auto insurance — car insurers have a lot of overhead that isn’t directly related to paying claims for customers.

For one thing, traditional auto insurance companies usually have the following employees who draw salaries:

• executives
• salespeople
• a marketing staff
• accountants
• a host of other administrative employees

Their headquarters are housed in big, fancy office buildings in urban centers. They run expensive ads on TV and the radio. Someone has to pay all these expenses, and it ends up being the customers in the form of higher premiums.

That said, the average customer’s share of their auto insurance company’s administrative expenses is small due to the sheer number of customers most of these companies have.

Co-ops collect premiums just as traditional auto insurance companies do, and they also pay out claims. But aside from a few employees vital to their operations, such as adjusters, they have none of the administrative expenses of traditional auto insurance companies.

Rather than high-paid C-level executives, co-ops vote on a board of members (or customers) to make decisions on behalf of the group.

Auto Insurance Co-Ops Are Not for Profit

Another important difference — traditional auto insurance companies are for-profit enterprises that exist to make money. Co-ops do not care about making money and only want to cover their expenses.

So it only charges enough in premiums to cover what they expect to pay in claims.

Auto Insurance Co-Ops Offer No Discounts

Traditional auto insurance companies offer the opportunity to receive several discounts on your premiums. However, few, if any, auto insurance co-ops offer discounts. And because they only accept drivers with good records, you don’t get any benefits for remaining accident-free and won’t be eligible for any of the exclusive auto insurance deals for good drivers.

Little variation exists in what auto insurance co-op members pay.

Auto Insurance Co-Ops Insure Good Drivers Only

Traditional auto insurance companies are huge and bring in a lot of revenue each year. They have thousands of customers who pay their premiums every month but never file a claim.

These good customers give them a nice cushion to take a chance on drivers with less-than-perfect records. Such drivers pay higher premiums, but ultimately, their insurance costs are still subsidized to some degree by the drivers who pay premiums but never file claims.

Even if your driving record is shaky, you can find a traditional company willing to ensure you. Auto insurers check your driving record every time it renews, but the worst that will happen is likely a rate increase.

Auto insurance co-ops don’t have the luxury of taking a chance on high-risk drivers with imperfect driving records. Co-ops are usually small and don’t have thousands of members.

How To Get a Good Deal on Co-Op Auto Insurance

If you can find an affordable co-op auto insurance company in your area, get quotes and compare them to other providers in your area. Without auto insurance discounts, co-op car insurance could be more expensive. Always compare auto insurance quotes from at least three companies before you buy coverage to ensure you’re getting the best possible rates.