Ask Stacy: How Do You Gauge Insurance Company Quality?

Money Talks News

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 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 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 Put the Brakes on Car Insurance Bills.” 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

Your question is excellent, Mariana. I’ve done some research. 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 2013 r esults here, bu t 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 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. 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:

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.

The bottom line: Quality counts

This website is focused on making you richer – something that’s often best accomplished with articles like ”9 Ways to Put the Brakes on Car Insurance Bills.” Not included often enough in similar articles, perhaps, is not to be penny wise and pound foolish. (Although we did recently publish an article called ”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 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.

This article was originally published on MoneyTalksNews.com as 'Ask Stacy: How Do You Gauge Insurance Company Quality?'.

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