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Cheap Auto Rates Don’t Mean as Much When Claims are a Hassle

While everyone wants a price quote to make sure they’re getting the cheapest auto insurance premiums possible, sometimes a few dollars more is worth it for better claims handling. J.D. Power and Associates just released their annual “U.S. Auto Claims Satisfaction Study,” which shows that plenty of people are unhappy with their auto coverage even in the face of cheap rates.

Some Surprising Study Results for Big Companies

The rankings, which are tallied on a 1,000 point scale, saw Auto-Owners Insurance take the top position for the fourth year in a row. Not only did Auto-Owners pull a score of 890, they were the only insurer examined to get a five-star rating. The industry average score was 846 with a three-star rating. The other members of the top-five, in descending order were:

  • State Farm, 878
  • Amica Mutual, 865
  • American Family 862
  • The Hartford, 858

Each of those companies was awarded four stars. Some of the surprises in the three-star list were heavy hitters in the auto insurance genre:

  • GEICO, 840 (ranked 10th)
  • Progressive, 836 (ranked 13th)
  • Allstate, 834 (ranked 15th)
  • MetLife, 824 (ranked 19th)

Customer satisfaction was significantly higher in cases were the damage to the automobile was deemed repairable. People who had their vehicles totaled tended to be unhappy, scoring their satisfaction 42 points lower than their counterparts who won a trip to the body shop. (The average customer satisfaction rating in cases where the car was totaled was 811.)

Clear Areas Where Auto Insurers Fall Down on Claims

Three things clearly resulted in lower customer satisfaction rankings, and each should be a consideration, along with cheap rates, in picking your auto insurer. (This is why it’s important not just to get a cheap rate quote, but also to research the company’s history and reputation.)

  • Poor communication, in particular a failure to explain the claims process and to deliver new or updated information in a timely fashion. This included answering follow-up questions from policy holders and a failure to return phone calls.
  • Speed of processing, with many customers waiting six days longer than the 12-day average for processing a claim on a car with damage that could be repaired.
  • Fair treatment, including adequate explanations of policies in advance, in particular those clauses having to do with out-of-pocket expenses. Many dissatisfied customers reported experiencing “nasty surprises” that proved expensive.

More than 11,500 responses were tallied to complete the annual study, which excluded those people who filed claims for glass and windshield damage. In part, this was a recognition of the fact that broken glass claims lead the pack in owner-perpetrated auto insurance fraud. Additional claimants that were excluded were people whose cars were stolen, and those who filed roadside assistance claims only.

Cheap Rates Are Good, But They Aren’t Everything

Certainly in tough economic times consumers want cheaper everything but it’s important to remember that even the lowest auto insurance rate can become too expensive in a hurry when the claims process is a nightmare. The most-satisfied auto insurance customers are those who can achieve a good blend of affordable rates and high customer satisfaction.

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