Ask Stacy: Insurance Price Is Important, but What About Company Quality?

Insurance
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Life in America requires insurance — lots of it.

Between car, home, health, life and disability, it’s easy to spend thousands on insurance.

In my case, for example, a quick mental tally is $11,000 annually. That’s high, especially when you consider my wife’s health insurance is paid by her employer, we have high deductibles on all our policies, don’t drive expensive cars, don’t have kids and don’t have life or disability insurance. Here’s the breakdown:

  • Cars: $2,200
  • Health: $4,800
  • Home: $5,000

(By the way, lest you think my home insurance bill indicates a mansion, we live near the Florida coast. Although our home is modest, the annual premiums for wind and flood insurance alone are $3,000.)

No matter what you pay for insurance, odds are you think it’s too much. I certainly do. That’s why we do so many stories featuring tips to lower the cost. One thing we rarely address, however, is company quality. And it’s important. After all, the only thing worse than paying a ton for coverage is paying a ton for bad, incompetent or stingy coverage.

Which brings us to today’s question:

Good morning,
I have been inspired to do a little bit of comparison shopping for insurance after reading your article “9 Ways to Drive Down Your Auto Insurance Rates.” But since I bundle my auto, motorcycle and homeowners insurance to get a sizable discount, I will be likely shopping for all three.

To keep it short, my question is: Is there a way to find customer satisfaction information about the payout of homeowner insurance claims? I want to save money, but not at the cost of having a lengthy battle with my insurer to replace my belongings in the case of a loss.

Thank you,
Mariana

Excellent question, Mariana. I’ve done some research, and here’s what I found.

Insurance company satisfaction surveys

When I did a search for “insurance company satisfaction,” one of the first sites to come up was Insure.com — the company that sponsors our insurance search tool.

Every year they do a “People’s Choice” customer satisfaction survey that measures customer satisfaction for things like claims processing and customer service. They get their results by surveying more than 5,600 insurance customers nationwide.

You can read the latest results here, but to save some time, I’ll boil it down for you. Here are the top three companies in each category, from first to third:

  • Top homeowners providers: USAA, Chubb, Allstate
  • Top car insurance providers: USAA, Auto Club of Southern California, CSAA Insurance Group
  • Top health insurance providers: Blue Cross Blue Shield of Florida, Blue Cross Blue Shield of Michigan, EmblemHealth
  • Top life insurance providers: Voya, State Farm, John Hancock Life

One potential weakness of this survey? Insure.com only includes the 20 largest companies (by market share) in each category. That means that a smaller company might be great, but not show up.

Another source for satisfaction information is J.D. Power and Associates. You can see their quality ratings for different kinds of insurance here. These surveys measure specifically what Mariana asked: how satisfied customers were with the payout of claims, as well as overall satisfaction and other benchmarks. Here’s how they describe their ratings:

All insurance ratings are based on the opinions of a representative sample of consumers who have used or owned the product or service being rated and are therefore indicative of a typical buying experience.

Their top performer for 2016 in the car insurance category was The Hartford. The winner in homeowners was Amica.

More ideas to check out an insurance company

Another good source for advice on scoping out insurance companies is USA.gov, a site with all manner of information on just about everything consumer-related. Here’s their advice on doing checks before writing checks:

  • Find out whether your state insurance department offers any information concerning insurance companies and rates.
  • Make sure the insurance company is licensed and covered by the state’s guaranty fund. The fund pays claims in case the company defaults. Your state insurance department can provide this information.
  • Check the financial stability and soundness of the insurance company with credit rating agencies.
  • Research the company’s complaint record with your state insurance department or the National Association of Insurance Commissioners, which has a database of complaints filed with state regulators.
  • Find out what others think about the company’s customer service by reading online reviews from current customers.
  • Make sure you receive a written policy. This tells you that the agent forwarded your premium to the insurance company. If you don’t receive a policy within 60 days, contact your agent and the insurance company.

To check the financial soundness of a company, use the free services of companies like AM Best and Standard & Poor’s.

The bottom line: Quality counts

This website is focused on making you richer — something that’s often best accomplished with articles like “9 Foolproof Ways to Save on Homeowners Insurance.” Not included often enough, perhaps, is advice about not being penny wise and pound foolish. (Although we have published articles like “12 Ways Skimping Now Can Blow Up in Your Face Later.”)

Mariana’s question raises an important point. Use insurance searches like ours to compare prices, but before you sign on the dotted line, dig a little deeper to make sure you’ll get what you pay for.

Take it from someone who’s lived through a hurricane or two: When you suffer a major loss, getting a quick, hassle-free check from your insurance company makes all those checks you send their way a little less painful. Not much, but a little.

What’s your experience with making insurance claims? Share with us below or on our Facebook page.

Got a question you’d like answered?

You can ask a question simply by hitting “reply” to our email newsletter. If you’re not subscribed, fix that right now by clicking here. The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate. If you’ve got some time to kill, you can learn more about me here.

Got more money questions? Browse lots more Ask Stacy answers here.

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