I used USAA for auto insurance for five years, or I should say they used me. They were the first insurance company I had my own policy with. While I lived at home, I was always on my parents' State Farm policy. When I acquired a car during my second year at the Naval Academy, I needed to find my own insurance. Everyone I knew who had a car there was insured by USAA and, without exception, they highly recommended USAA.

Here is where USAA has some great marketing propaganda going on. At the time, they only insured military officers (and midshipmen/cadets). Since they have expanded to insuring non-commissioned officers (mid-grade and higher ranking enlisted military personnel), but their services are still open only to military members and their dependants. I never even compared prices when I bought my first policy. In fact, most people I know who use USAA have never compared prices, though most of them are quick to claim that they are getting a great rate.

USAA has developed a huge customer base that never questions them by following a two part approach. First since they only insure military members and many of the employees are retired (or former) military personnel, they do a great job of selling the idea that they are "one of us." People erroneously believe that USAA looks out for them when no other insurance company would do so. Second, they have "members" rather than customers. All members receive a member dividend twice a year, which makes them feel that they are a part of the organization and are sharing in the profits. By using this approach, USAA has built a very large following of extremely loyal customers.

Here's my USAA story.

I was very happy with USAA for several years, until I had to file a claim. I was involved in an accident which was clearly the other driver's fault. However, he lied in his report and made it sound as if it were my fault. I did not even realize that he had done so until I finally had a copy of the police report in my hand about a week later. The police did not assign fault and no tickets were issued to either of us.

USAA promptly decided that the accident was my fault and paid the other driver's claim. Additionally, an adjuster looked at my truck when I wasn't even there and sent me a check for the body damage. I called him and told him that there was mechanical damage as well, which did not note. He told me to go ahead and have it repaired, then submit the bill from the mechanic and they would pay the additional amount.

Being young and naïve, I believed him and had the vehicle repaired at my own expense expecting reimbursement. However, when I submitted the supplemental claim (which would have been part of the original claim if the adjuster had done his job) he informed me that this damage could not have occurred as a result of the accident. He told me that it was prior damage and I just hadn't noticed it before the accident. When I explained that this was simply not possible because the truck shook so badly that I couldn't drive it over 40 mph, he practically accused me of lying.

I went back to the mechanic who had repaired the truck and got a statement that the damage was indeed a result of the accident. I also went to two other mechanics and got statements that they would expect similar damage from this type of wreck. I called the claims adjuster several times a week for four months and finally threatened a lawsuit before he finally reluctantly agreed to pay just to shut me up. Even then he still maintained that the damage was not a result of the accident. The day after my check arrived, I received notice from USAA that they were raising my rate!

A few months later, I got the only speeding ticket of my life and they doubled my rate! I went looking elsewhere and found much better service with Allstate at a rate lower than my original rate with USAA. I have filed one auto claim and one homeowner's claim with Allstate. They were very prompt and helpful on both occasions and did not raise my rate afterward.


Let's talk about the problems.

A large majority of military officers whom I know are insured by USAA and most are extremely loyal and dedicated fans of the company. Most have also never had insurance from any other company and most have never filed a claim. This, I believe, is due to the "we're one of you" and "you're a member, not a customer" propaganda. Try to find someone who has actually shopped around for rates or someone who has gone through the pain and rate increases of filing a claim and see if they still like USAA.

The downsides to USAA insurance can be summarized quickly. The customer service is great until you have to file a claim, then it becomes very problematic. The rates are competitive if you have a perfect driving record, but are not the best available. If you have had even one moving violation, their rates won't even be close to competitive. Finally, they will lie to try to avoid paying you. Do you need to know any more?

There are some good points.

As I said above, the customer service for routine needs (not filing a claim) is very good. For matters such as address changes, questions about billing, and so forth they are very helpful.

They do cater to the needs of military members. They provide insurance for any area in the United States and changing coverage for moving from one location to another is very easy. They also provide insurance to military members overseas. If you've ever tried to get insurance in Italy or Bahrain, you'll know that that is a big plus for USAA.

Finally, USAA is not just in the insurance business. They provide a wide range of financial services including banking, mutual funds, and financial planning.

Recommendation.

USAA is a solid company for a number of financial services, but I would look elsewhere for insurance.




Recommended: No