Drivers Put the Brakes on Their Car Insurance

Photo (cc) by cygnus921

We’ve mentioned how consumers have little confidence in their health insurance. So it’s probably no surprise their opinion of car insurers is also screeching to a halt.

A new study [PDF] by consumer research firm J.D. Power and Associates measured customer satisfaction with auto insurance companies in five areas:

  • interaction
  • policy offerings
  • billing and payment
  • price
  • claims

What they found: Compared to last year, overall satisfaction dropped a whopping 30 index points compared with 2009 – from 807 down to 777 on a 1,000-point scale.

Most of the drop was due to just one factor: price.

The study found that 22 percent of driver suffered a premium rate hike, compared with 17 percent in 2009. Even worse, six in 10 policyholders said they received no advance notice of those hikes from their insurers.

“Now that the market has stabilized, consumers are feeling more in control of their finances and have become more aware of and sensitive to the rate increases that have started to occur since the recent recessionary period,” says Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “As a result, customers are considerably less satisfied with their insurer and their rates, and have begun shopping for new insurers at unprecedented high levels not seen since prior to the recession.”

So which company rated the highest? Was it the Geico Gecko? The Good Hands People? No, it was Amica Mutual, founded in Rhode Island in 1907.

California dreaming?

Meanwhile, on the other side of the country, the state of California was devising its own solution to the high cost of auto insurance.

Last week, California legislators strengthened and extended something called the Low Cost Auto Insurance Program, which offers a cheap, bare-bones car insurance policy to low-income motorists with good driving records – at no taxpayer cost. Even though the premiums are less than $400 per year, that’s enough for the most basic liability coverage. In fact, the law requires premiums cover all the claims paid out under the program.

“The low cost auto insurance program is a win-win solution offering real help to low-income Californians without costing the public a dime,” says Douglas Heller, Executive Director of Consumer Watchdog, a nonpartisan nonprofit organization. “By signing this bill, Governor Schwarzenegger will allow those who are struggling in this brutal economy to afford car insurance and keep the roads safer.”

About 55,000 Californians have joined the program, which caps individual income at $27,075 (or $55,125 for a family of four) and the value of the car at less than $20,000. What they get: coverage for $10,000 in bodily injury per person, $20,000 per accident, and $3,000 in property damage.

The Low Cost Auto Insurance Program began in 2005 and has gradually expanded across California. Since California is often first with consumer programs, is it inevitable this program will expand across the country?

Gen Y behind the wheel

Back to the The J.D. Power study for a moment. It also uncovered some intriguing trends among young drivers, specifically Generation Y (those born between 1977 and 1994)

  • Gen Y customers are more critical of their insurance providers, compared with their parents and grandparents. In particular, they expect to be able to reach a service representative immediately, and they want those representatives to deliver clear explanations of their insurance policies.
  • Baby Boomers (those born between 1946 and 1964) tend to place a great deal of importance on traditional communications from their insurer, such as a new customer welcome kits, newsletters and magazines. But Gen Y customers are more concerned with accessing their policy information online.
  • While website usage among Baby Boomers is increasing, only 40 percent of Baby Boomers report using their insurer’s website to review or make changes to their policies – compared with 60 percent of Gen Y customers.

While J.D Power makes the obvious prediction that online services will become even more important to car insurers, the company also predicts those companies will soon write their own smart-phone apps. Is the day coming soon when you don’t call your insurance agent, but you use you phone to file the entire claim?

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
5 Ways to Put an End to Junk Mail
5 Ways to Put an End to Junk Mail

Here’s how to keep unwanted mail from clogging your mailbox and trash can.

7 Reasons Not to Move When You Retire
7 Reasons Not to Move When You Retire

Sunny skies and warm breezes sound great. But in reality, you might be better off retiring closer to home.

Have You Heard of This Best Place to Retire in 2020?
Have You Heard of This Best Place to Retire in 2020?

The best place to retire in America is one you likely are not familiar with.

10 Places Where Social Security Offers the Best Standard of Living
10 Places Where Social Security Offers the Best Standard of Living

These U.S. counties offer retirees a chance to stretch their benefit checks while enjoying their golden years.

7 Reasons You Should Not Claim Social Security Early
7 Reasons You Should Not Claim Social Security Early

The sooner you claim your Social Security retirement benefits, the more you — and perhaps also your spouse — stand to lose. Here are the stakes.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

These Major Appliances Got the Worst Reviews in 2020
These Major Appliances Got the Worst Reviews in 2020

Consumer Reports says these home products got the worst ratings from experts.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

3 Cable TV Companies Hiking Prices for 2021
3 Cable TV Companies Hiking Prices for 2021

Still married to your cable company? Hold on to your wallet!

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

15 States With the Largest Homeless Populations
15 States With the Largest Homeless Populations

Some of the states with the highest rates of homelessness might surprise you.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.