Costco Sells Home Insurance: Is It Worth It?

Drummondville,Quebec,Canada-July 12,2013:Costco Wholesale storefront in Drummondville at dusk.
Yvan DubA /

You can buy pretty much everything at Costco. From a $4.99 rotisserie chicken to a 30-pack of toilet paper and even a set of four tires for your car, it’s the one-stop-shop warehouse. But did you know you can also get home insurance as part of your next shopping trip?

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If you’re a card-carrying Costco member, you’re able to sign up for CONNECT home insurance, offered through a partnership with American Family Insurance. There are exclusive member benefits for making the switch to CONNECT. Among them, discounts (Costco says around $587 in savings the first year) as well as added perks like reimbursement for glass repair and home lockout assistance. 

All of the home insurance plans also come with standard American Family Insurance policy benefits like identity theft protection, stolen credit card and check fraud coverage, and “refrigerated property” protection (when a power outage spoils your food, you’ll get money to stock up again at Costco!). 

As well, if you take advantage of the auto insurance Costco also provides, you could be eligible for multi-policy discounts to make your monthly bill even more affordable. 

But — discounts or not — is Costco home insurance any good?

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According to Value Penguin, a review site from Lending Tree, they call Costco home insurance a “poor choice” for members, saying that fees are more expensive than most other policies, roughly $999 annually, or 6% more than the average cost for other plans. 

And even though the extra perks are nice, CONNECT plans have been cited for long claims processing times. Value Penguin gives CONNECT home insurance plans just two out of five stars for these reasons.

Part of the issue they say is that underwriters American Family Insurance only has a network of 2,000 agents nationwide and no local agents, compared to about 19,000 for State Farm, the result of which often delays claims.

This Old House gives Costco home insurance a better review, awarding it a rating of 78.25 out of 100 points. Their biggest gripes are the fact that CONNECT is only available in 44 states (excluded are Michigan, North Dakota, Wyoming, Louisiana, Maine and West Virginia) and the fact that Costco doesn’t underwrite its own policies and customer service is not available 24/7. 

Though the site does give it high marks for its overall affordability (dependent on a lot of factors such as where you live and what materials your house is made of) and some added perks such as wildfire protection in certain areas, coverage for water backup and sump pump overflow and coverage for jewelry, fine art and musical instruments. 

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Investopedia also thinks CONNECT from Costco can be a good option for members. They tout the “claims-free discount,” offering reduced premiums for no claims filed in a five-year period as well as discounts for installing home security systems and for a long tenure with the company (maintaining the policy over a long period of time). However, they also knock the plan from a perfect score due to the fact that there’s no service from local agents. 

Consumer advocate website also is also lukewarm on the value of Costco’s home insurance policies, noting, “Costco offers exceptional prices to members on many products and services, but there’s no guarantee this is one of those great deals.”

In gathering price quotes for several homeowner scenarios in a few states across the country, found policy offers to be “middle of the pack.” 

While they also point out the Costco member special perks like protection from check fraud, food spoilage and identity theft, they note that not all perks come with the standard Costco membership. For some, you’ll need an executive membership, which is double the annual fee, of $120. And beyond those special perks, the homeowner policies in general are the same as standard insurance options. 

Make Your Money Work for You also notes that CONNECT has poor customer service ratings, receiving “more customer satisfaction-related complaints than average for a company of its size.”

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The bottom line, as advises, is to shop around. As they say, “A lower premium isn’t a good deal if the coverage included won’t provide enough protection for your property.”

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About the Author

Selena Fragassi joined in 2022, adding to her 15 years in journalism with bylines in Spin, Paste, Nylon, Popmatters, The A.V. Club, Loudwire, Chicago Sun-Times, Chicago Tribune, Chicago Magazine and others. She currently resides in Chicago with her rescue pets and is working on a debut historical fiction novel about WWII. She holds a degree in fiction writing from Columbia College Chicago.
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