Is USAA Insurance Expensive?

Some people think that USAA insurance is expensive. How does USAA insurance compare to other insurance companies?

Mohit Oberoi, CFA - Author

Oct. 20 2020, Updated 12:37 p.m. ET

Source: istock, USAA

When it comes to buying insurance, there are various aspects that you should consider like the premium that you pay for the policy. With a plethora of online comparison tools available and an ever-growing number of companies providing insurance including startups like Root Insurance, consumers are spoilt for choice. USAA (United Service Automobile Association) and Berkshire Hathaway-owned Geico are among the most popular auto insurance companies in the U.S. However, some people think that USAA insurance is expensive. Is USAA insurance really expensive? 

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What is USAA?

USAA is a diversified financial services company that offers various solutions like banking insurance, investments, and retirement. The company was founded in 1922 and is based in Texas. USAA is a membership-based platform. At the end of 2019, the company had 13 million members and 35,000 employees. The company had a net worth of $35.3 billion at the end of 2019.

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Who qualifies for USAA insurance?

USAA insurance isn't open to everyone. Only members of the U.S. military and their eligible family members can join USAA. According to the company, the following individuals qualify for a USAA membership.

  • All serving members of the U.S. Army, Airforce, Navy, Marines, Coast Guard, National Guard, and Reserves.
  • All retired and separated individuals from the U.S. military. However, the discharge should have been an Honorable discharge.
  • Current spouses, children, widowers, and widows of USAA members. Un-remarried former spouses of USAA members qualify for a USAA membership if they joined USAA during or before the marriage.
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Midshipmen and cadets at U.S. service academies or affiliated preparatory schools also qualify for USAA membership. Midshipmen and cadets on ROTC (Reserve Officers’ Training Corps) scholarships or those in advanced ROTC are also eligible for USAA membership.

Why is USAA insurance so expensive?

While many people complain that USAA insurance is expensive compared to other companies, the complaint doesn't seem to be true. According to a study done by U.S. News, USAA's car insurance premium is the lowest. “USAA’s national average representative rate is $885, which is the least expensive of the companies in the survey by far, according to our study data and driver profiles; it’s $531 less than the average representative rate across all the companies in our study,” said the report.

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Geico was the second least expensive insurance, according to the study. Last year, Tesla also got into auto insurance. Berkshire Hathaway chairman Warren Buffett wasn’t very optimistic about Tesla succeeding in the auto insurance business.

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However, there may be periods when USAA increases its premiums before its competitors. For a short period of time, USAA insurance might be expensive compared to other companies. 

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Is USAA insurance good?

USAA ranks high based on consumer surveys. According to the U.S. News survey, “More than 70% of USAA customers were completely satisfied with the ease of filing a claim, while 73% report being completely satisfied with USAA’s customer service during the claim process.” The report also said, “USAA did better on every measure in the survey than any other company.” NerdWallet also assigned USAA auto insurance a rating of five, which is its highest possible rating.

Despite USAA’s good score on customer satisfaction and low rates, you can't buy the insurance if you don't meet the eligibility requirements. Most other insurance companies don't have eligibility requirements.


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