Changing Car Insurance Companies for Better & Cheaper

Policyholders give a lot of credit to their providers and don’t change auto insurance companies. But somehow those insurers find a way to disappoint customers. One bad feeling is quickly remembered when the services start playing up again. So, providing good service is the key to retaining policyholders. And it is more important than keeping the prices same or lower at renewals.

When policyholders are happy they are probably not going to shop around for cheap vehicle insurance rates. Actually, being happy usually includes being happy about the premium paid as well. On the other hand, less than fully satisfied policyholders may quickly be tipped over the edge with premium increase and look for alternative provider. They are a lot likely to switch car insurance providers even when the premium difference is not much.

satisfied policy holder

What the Figures Say about Changing Car Insurance Companies?

This theory is recently supported by a J.D. Power analysis. Their findings are that poor service is the main reason replacing auto insurers. Insurers lose more customers because of this than having higher premiums or increasing premiums.

According to this study, about 13% of policyholders decided to look for alternative providers after receiving rate increases. On the other hand, 28% of the shoppers decided to change car insurers when they received a lousy service. This goes to show that people are more motivated to switch when they are badly treated by their providers.

Which Areas of Services Are the Most Important?

If providers want to avoid policyholders switching to rival insurers they need to listen to complaints. The areas needing improvement are claim handling, billing resolution and overall communications with policyholders. Being informed about the price and other important developments is appreciated by clients of most businesses.

And new customers want to see that the savings offered are the real savings rather than the ones achieved by rehashing the coverage. Motorists are worried that they will be losing out on coverage when the price goes down. In addition, they get disappointed when the savings are nowhere near what the advertisements claim.

Is It Worth Changing Auto Insurance Companies?

According to J.D. Power, about 1/3 of policyholders shopped around for alternative offers and about 1/3 of them end up replacing car insurance carriers last year. The motorists who switched saved on average $300 per annum. No doubt, this would be a good enough saving for most people.

Nonetheless, many people in the survey complained that they were hoping for even bigger savings. The general problem appears to be the misleading advertisements. People start their search with a big discount expectation because of the advertising campaigns promising just that. When they cannot save as much as they hoped for they get disappointed.

While motorists would usually find savings from other insurers when they carry out comparison shopping a few people may not be impressed enough with discounts to change vehicle insurance companies. It appears that many people are encouraged to shop around by the advertisements. And the same advertisements end up disappointing them when they don’t get what is promised in the advert.

It is an interesting finding. In a way, people get disappointed when they can only save couple of hundred bucks because the advertisement promised them to save $500 or more!!  Here are the other findings of the report.

  • It appears that insurers have been managing the premium increases a lot better lately. They communicate with their policyholders about the premium increases, explaining why the premiums have to increase and stressing that they still get value for money.
  • Many customers are happy to stomach the small rate increases. However, they are three times more likely to look for alternative quotes and replace auto insurance carriers with cheaper ones when they face with more than $200 increases. Large numbers of policyholders see increases below $100 while about 50% see no movement or reduction in premium.
  • The savings are likely to be greater when policyholders shop around after being with the same company for a while. According to the experts, this is because they have been seeing their premiums going up slowly for number of years.
  • Customers who have been with the same company for at least 11 years saved nearly $430 pa on average when they switched. Customers who have been with the same company for less than 2 years saved about $290 pa on average.
  • Customers who have been highly satisfied in their first year with an insurer, 80% remained with that carrier. Only 40% of those highly satisfied customers after the first year shopped around. Only 60% of the customers who were less satisfied remained with their respective companies. And also 60% of those less satisfied customers looked elsewhere for better deals (as opposed to only 40% of satisfied customers). This supports the key findings that customer satisfaction is the main reason for switching automobile insurance carriers.
  • Among the 23 insurers assessed by J.D. Power, Erie Insurance, MetLife, State Farm and USAA were the ones with the best customer satisfaction. Farmers, Progressive, Safeco, 21st Century, Travelers and Mercury were the ones with the lowest satisfaction ratings (out of 23). It should be kept in mind that there are hundreds of companies in the USA.

How to Find Companies with the Best Customer Service?

These figures may lead to questioning the quality of service you receive. If you are one of those motorists who wants decent customer service from automobile insurers here are the tips to find them.

  • Check State Insurance Department Reports: Most states publish “consumer complaint ratios” on their websites. These figures show how many complaints a firm receives per 1,000 policies sold. These reports should give you a good idea how satisfied customers of the company you are considering. If your state doesn’t provide such reports you can check another state insurance department reports.
  • Ask Family and Friends:  You would trust their recommendations more than anyone else’s. Their first-hand experience would be more valuable than any other recommendation.
  • Look for Other Independent Customer Satisfaction Reports: When you search online you can find a few people and firms rate insurance companies based on customer satisfaction. These could come from independent studies, research firms, accident lawyers and consumer advocates. Large independent insurance websites may carry out their own studies and publish their reports as well. You are highly advised to check them before you swap vehicle insurance providers.
  • Check Financial Strength Ratings: Standard & Poor’s and A.M. Best publish these reports based on insurer’s ability to pay out claims. Some organisations display these ratings on their own websites. Standard & Poor’s publishes the firms with at least BBB ratings. This doesn’t tell you much about customer satisfaction but those companies don’t come to where they are with lousy service.
  • Ask Recommendations from Auto Body Shops: They are the ones who will fix your car after an accident. Furthermore, they deal with many insurers and should be able to tell you which ones they are having problems with. Or which companies care less about making sure their customers are fully satisfied after the repairs and care more about how cheaply they can get those repairs done.

Always Compare Competing Quotes

Unfortunately, there are carriers with terrible customer service and yet very expensive premiums. You would be the unluckiest motorist if you paid tons of money and still end up with a lousy insurer. So, make sure that you don’t pay too much while looking for good service. Regardless, of being satisfied or believing you are paying reasonable rates you should make a habit of getting several quotes from alternative sources at each renewal.

Besides, there is no reason why you shouldn’t replace a car insurer when the service is bad. You can find an affordable quote from a highly reliable carrier. Generally, insurance intermediaries love to use the phrase “You get what you paid for”. Although there may be some truth in that saying, paying the price you are quoted doesn’t guarantee full satisfaction. You should at least know that you are not being charged ridiculous premiums. It is so easy to do so with online quotes that it is a wonder why people wouldn’t check what else is out there.

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