Consumer Policies (ex. Home, Auto, Life, Renters)
Choosing an insurance company today can be very confusing. Insurance companies spend massive amounts of money to advertise in ways that have nothing to do with the quality of the company or the policy. For instance, Allstate has its mayhem ads featuring a mean-spirited smart aleck who personifies different types of risks that are unlikely to happen. State Farm uses NFL celebrities like Patrick Mahomes, Travis Kelce, and Derrick Henry, along with the likeable Jake from State Farm, to talk about how a consumer can get different discounts. Unfortunately, these ads distract from what you should be looking for in an insurance company. To quote Rutgers University’s Essential Protections for Policyholders blog, “Insurance is mostly sold on the basis of ignorance, not information. That needs to change.”
The two starting points for determining which insurance companies to choose are 1) what is covered by the policy and 2) does the insurance company pay claims. As to how to choose insurance policies, you should read policies and consider the types of risks you need covered. You may have to ask your agent for sample policies. You may have to insist because insurance companies often do not make it easy to see the actual policies and fine print before you purchase the policy. You also will want to ask your agent or broker about all available coverages and ask them to explain them. If they don’t want to spend time doing this, then find another agent or broker. Take notes and consider recording your conversation (legally of course). In An Insurance Lawyer’s Recommendations on Homeowners Coverages for Hurricanes, Hail and Tornadoes I discussed some important coverages and policy features of insurance policies.
The other major question you need to be asking is does this company do a good job of actually paying claims. Insurance companies like State Farm don’t like to talk about this part of their business (probably because State Farm Fire & Casualty Company has over two-and-half times the complaints of the industry average). In addition, insurance companies lobby for laws that keep much of the information that they report to state departments of insurance secret. This often includes data on what percentage of claims they pay and amounts they pay. However, this is the information consumers need to determine which company to select. It is similar to the reliability information on a car.
So what can you do? First, try to determine whether the company values claims service or is just trying to put lipstick on a pig (like State Farm currently does). This article in Claims Journal highlights the types of company values you should seek. In discussing its hiring philosophy, a representative of Erie Insurance is quoted as saying: We really look for people that are good at service,” Cook explained. “Sometimes not even in the insurance application, but often times, we interact with service-minded people throughout their interactions outside of the company, and we’ll recruit those kinds of people, and we attract those kinds of people. This type of attitude promotes good claims service. J.D. Power also does various insurance satisfaction studies, including the following study on homeowners insurance. In this study, Chubb ranked number 1.
Another important piece of information is the number of complaints filed against an insurance company and how that company compares to the rest of the insurance industry. You can find this information on the website for the NAIC (the National Association of Insurance Commissioners. If you want to see how a particular company compares to the industry as a whole, you need to select “Results by Complaint Index” after you have searched for a specific company.
Aside from this blog, there are some other really good resources for learning about selecting the property insurance policy. First, United Policyholders has its Roadmap to Preparedness program that contains many amazing resources. You can find a link here. Also, make sure to check out your state department of insurance website. Here are the links for Alabama, Texas, and Washington State:
Commercial Insurance (ex. Property, Liability, Excess, Directors and Officers, Errors and Omissions)
If you are a business looking for coverage you really need expert help. There are many different types of policies to cover the many different types of risks confronted by businesses. Each of these policies have very important coverages and intricacies that can trip you up. In order to select the right commercial policies, you should look for a broker or independent agent that specializes in commercial insurance. You generally should not go to a captive agent that mainly sells to consumers. These agents typically do not have the training you need to select the right kind of insurance and the results can be disastrous. In order to make sure that your broker or independent agent has the necessary training, look for the Certified Insurance Counselor (CIC) or Chartered Property Casualty Underwriter (CPCU) designations. In addition, a number of colleges now offer insurance specific degrees. Finally, look to see the number of years that the broker has been assisting businesses with their insurance needs.
If we can help with your insurance claim dispute, please let us know.
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