How to gauge the quality of insurance companies
The Web is full of tips about lowering the cost of coverage, but how about some advice on getting what you pay for?
This post comes from Stacy Johnson at partner site Money Talks News.
Between car, home, health, life and disability, it's easy to spend thousands.
In my case, for example, a quick mental tally tops $15,000 annually. And I have high deductibles, don't drive an expensive car, and don't even have life or disability insurance. Here's the breakdown:
- Cars: $1,300
- Health: $10,000
- Home: $4,000
(By the way, lest you think my home insurance bill indicates a mansion, I live in Florida. Although my home is modest, my premiums for wind and flood insurance alone are $3,000 annually because I live near the coast.)
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 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 me to a recent question:
My question: 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.
Good question, Mariana! Here's your answer:
Every year Insure.com does 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 2013 results here, but to save some time, I'll boil it down for you:
- Top homeowners providers: USAA, Amica Mutual, and Country Insurance
- Top car insurance providers: USAA, Erie Insurance, and Auto-Owners Insurance
- Top health insurance providers: Kaiser Permanente, BCBS of Illinois, and Humana
- Top life insurance providers: American General, Jackson National, and Allstate
If you're looking for a specific company, you can see a chart showing the scores of 20 companies in each category here.
One potential weakness of this survey? Insure.com includes only 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. Just a few days ago they released their 2013 Property Claims Satisfaction Study. This measures specifically what Mariana asked: how satisfied customers were with the payout of claims, as well as overall satisfaction and other benchmarks.
Their study ranks 19 companies and was based on "more than 5,500 responses from homeowners insurance customers who filed a property claim between May 2011 and January 2013."
Their top performer for 2013 was Amica Mutual, followed by Chubb, then USAA.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:
The bottom line: Quality counts
When buying insurance, whether it's home, life, auto, rental or other:
- Find out whether your state insurance department offers any information concerning insurance companies and rates. This is a good way to get a feeling for the range of prices and the lowest-cost providers in your area.
- Check several sources for the best deal. Try getting quotes from an insurance-focused website, but be aware that many online services may provide prices for just a few companies. An independent insurance agent that works with several insurers in your local area might be able to get you a better deal.
- 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. Ratings from A.M. Best, Standard & Poor's, and Moody's Investors Service are available online and at most public libraries.
- Research the complaint record of the company. Contact your state insurance department or visit the website of the National Association of Insurance Commissioners, which has a database of complaints filed with state regulators.
- Once you pay your first insurance premium, make sure you receive a written policy. This tells you 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.
Mariana's question raises an important point. Use insurance searches and other resources 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 times are tough, getting a quick, hassle-free check from an insurance company makes it a little easier to send so many checks their way.
More from Money Talks News and MSN Money:
- 9 ways to trim car insurance bills
- Why you should shop for insurance
- Are you insured against a landslide?
- 9 ways to put the brakes on car insurance bills
- Teen driver deaths on the rise
- 7 ways to slash the cost of homeowners insurance
Nobody wants to fight to the death to get a legitimate claim paid, but I don't want to pay for champagne and caviar customer service, when all I really want is for them to hold up their end of the agreement.
"Like a good neighbor", that is until you have a claim, then we will nitpick every item and make you jump through hoops. Then you are dead to us. We will jack your rates to the moon and when you try to switch companies, we will blackball you with all our friends. Take that sucka.
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