Homeowner's insurance buying decision - price vs reputation

[Sojourner]

I'm shopping around for a new HO insurance policy, since my current/previous company decided to switch to a different underwriter and my premium is going up by more than 60%.

I've gotten a variety of online quotes from various companies, and most of them are within about $100-200 of each other for the annual premium. But one is noticeably lower, much closer to what I've been paying for the past few years. However, I heard from someone in my neighborhood that this particular insurance company has a not-so-good reputation when it comes to paying out claims. The one claim I had a couple years ago (the only HO insurance claim I've ever made in nearly 20 years of being a homeowner) was paid pretty quickly with no issues.

So my question is, would you go with a company offering a substantially lower premium than the others, or would you prioritize the company's reputation for how quickly and smoothly they handle claims payments? I'm tempted to make the decision based mostly on price, since I only have anecdotal evidence of how customer-friendly these companies are when it comes to handling claims. FYI, the company I'm considering going with is Allstate.

 

[Scuba]

Does Allstate have a bad reputation for claims payment? I’ve had Allstate for many years. Never had a claim on homeowners policy but have on auto and claim was processed quickly with no issues.

Having said that, for me it would depend on the price difference. I wouldn’t change from a carrier I’ve had good experience with for a minor savings, but if the savings were meaningful enough to me, I’d probably switch, especially since homeowners claims are few and far between.

 

[Sojourner]

I wouldn’t change from a carrier I’ve had good experience with for a minor savings, but if the savings were meaningful enough to me, I’d probably switch, especially since homeowners claims are few and far between.

This is basically how I'm looking at it, too. If the likelihood of filing a HO insurance claim in any given year is, say, 7%, and the likelihood of a particular insurance company having a very customer-unfriendly claims process is, say, 30%, then that's equivalent to a mere 2% chance I'd have to deal with such a thing over the next year. Seems worth the small risk to save several hundred dollars. But I'm still curious how others tend to view this when making a decision about insurance coverage.

 

[joeea]

would you go with a company offering a substantially lower premium than the others

I would go with a lower premium, if I could convince myself that their customer satisfaction was decent enough for my needs. Cost is not always an indicator of quality.

This might help: 2017 U.S. Home Insurance Study - Homeowners Insurance: | J.D. Power

(My insurance company is rated "about average" in pretty much every category. The premiums have been reasonable, and I've never had a problem getting a claim approved.)

 

[ExFlyBoy5]

This is basically how I'm looking at it, too. If the likelihood of filing a HO insurance claim in any given year is, say, 7%, and the likelihood of a particular insurance company having a very customer-unfriendly claims process is, say, 30%, then that's equivalent to a mere 2% chance I'd have to deal with such a thing over the next year. Seems worth the small risk to save several hundred dollars. But I'm still curious how others tend to view this when making a decision about insurance coverage.

That's a good analysis. For me, I don't mind paying a little more for coverage that is more than adequate and that has a reputation for handling claims in a most excellent manner. I am not trying to be blase about spending money willy nilly, but I would prefer to save money in other areas and spend more money for a product that would help mitigate extreme strife in the off chance that a disaster (quite literally) strikes.

Nonetheless, I appreciate the conundrum. I have been going back and forth on having full coverage on my car. I know I can afford the loss, but I can't help but think that Murphy's Law would kick me in the arse the day after I cancelled the full coverage.

I would go with a lower premium, if I could convince myself that their customer satisfaction was decent enough for my needs. Cost is not always an indicator of quality.

This might help: 2017 U.S. Home Insurance Study - Homeowners Insurance: | J.D. Power

(My insurance company is rated "about average" in pretty much every category. The premiums have been reasonable, and I've never had a problem getting a claim approved.)

It doesn't surprise me that my insurer was the award recipient in your link. I haven't been super thrilled with the premiums, but the accolades come with the increased costs, and I am OK with that.

 

[Red Badger]

I was with State Farm for 20 years. When we moved to NC, I ended up with an buffoon disguised as an agent as well as a new "chintzy" SF. I dropped them and went with USAA based on JD Power survey several years ago. It's all positive - wish I'd done it years earlier.

 

[Another Reader]

I have used State Farm for 40 years. Never a problem with a claim. They were very rare and all except two were automobile. One was a roof claim for hail damage. I was pretty late to file as no one told me about the damage initially and the roof was older. In the end, the roof was replaced. One of my tenants hit the wall of the garage with his SUV in a rage. Totally his fault. That was repaired quickly and State Farm went after the tenant.

I value customer service when it comes to insurance. The agents grumble that State Farm is becoming more like Geico and the other low cost providers, but I haven't seen it yet. Maybe I will the next time I have to file a claim.

 

[swaneesr]

First and foremost, look at the policy details and compare. What is the roof coverage? Some of this varies by state I would think.

Would you go with the company that offers the lowest premium? Yes, my rates jumped up two months ago. Maybe these rates are determined by state and zip code?

How do you factor in company reputation? Need to be careful taking the advice of neighbors and others. I would think JD Power and other ratings agency is a better way to gauge a companies service.

Consider bundling home, umbrella, auto, etc

Independent Agent? One that can recommend several insurance companies.

What is the companies online presence? The Liberty Mutual app allows me to make coverage changes like adding coverage on a new outbuilding or removing a car, etc. You can also Initiate a claim. I give them extra credit for the good app.

Sometimes I wonder if I am paying for all those Liberty Mutual ads. I also wonder if insurance companies make the long term custmers subsidize getting new clients “in the door”. Maybe this is not true?

I have a hail damage claim from last year. Once this is over I will get three quotes. One will be from Liberty Mutual - I have no complaints with them other than the recent price hike. A second quote will be with an indepenent agent. The third might be a company like USAA or another company that one of you gentlmen and ladies mention in this thread.

Over the years I have had a few claims. It is rare. We had tornado damage to our first house in 1998. House suffered medium damage. Hole in roof. Water damage and garage door pushed in and garage walk pushed out. In 2008 another tornado that passed overhead missed out neighborhood buy hit hard with hail. Last year, 2017 (thought we were safe for one more year). Small amount of very big hail. Not many, but big dents in roof, siding, gutters.

On another note. We have had a cabin in the family built in 1986. We have owned since 2003. No owner has ever had a claim. Go figure.

Swanee

PS - check how they treat the roof. Do you owe a percentage of the replacement based on 30 year roof life and are you comortable taking that on? Same for siding. Meaning if the roof is 15 years old, are you comfortable paying for 1/2 the replacement cost? Make sure your coverages and details match.

 

[candrew]

Have made 3 H.O. claims over the past 35 years. One each with Hartford, State Farm and Met Life. All claims were handled efficiently.

Currently with Farmers as they had the best overall bundled pricing for our needs.

 

[athena53]

PS - check how they treat the roof. Do you owe a percentage of the replacement based on 30 year roof life and are you comfortable taking that on? Same for siding. Meaning if the roof is 15 years old, are you comfortable paying for 1/2 the replacement cost? Make sure your coverages and details match.

Yes- definitely compare coverages. In areas such as TX, windstorm losses are a big % of the premium because they happen so often and the roofers swarm into the affected places like worms after a rainstorm, offering "Free Roof!* *(Must have insurance)". Whether you want to pay for coverage for a new roof after some hail damage to a 2-year old roof is up to you, but it will cost more.

To answer your question: I pay for better coverage and a better reputation. I've never had a Homeowners claim so can't recommend specific companies. Remember, too, that no insurer will ever have 100% satisfaction unless they're writing a blank check to everyone who files a claim. There will always be claimants unhappy with a settlement even if it's exactly the coverage they paid for.

 

[akck]

We had Allstate for years and never had a problem with any claims we made. That said, over the years, they steadily increased premiums over the years, mostly after the major hurricanes and we don’t live in a hurricane area. I managed to keep the cost increases down by upping deductibles. After the last increase, I checked around and was able to find an insurer that provided a 60% decrease in cost for both auto and HO. I don’t know how the new company handles claims since we haven’t had any in the last 10 years (5 with new company).

 

[meierlde]

One issue to be concerned with is it is better to move all insurace (car, home,umbrella) at one time as you need to look at the combined cost. (Plus there are often multiple line discounts) in addition for some things you make have to shop for a new umbrella policy if the company requires the underlying coverage to be with them.

 

[meierlde]

Yes- definitely compare coverages. In areas such as TX, windstorm losses are a big % of the premium because they happen so often and the roofers swarm into the affected places like worms after a rainstorm, offering "Free Roof!* *(Must have insurance)". Whether you want to pay for coverage for a new roof after some hail damage to a 2-year old roof is up to you, but it will cost more.

To answer your question: I pay for better coverage and a better reputation. I've never had a Homeowners claim so can't recommend specific companies. Remember, too, that no insurer will ever have 100% satisfaction unless they're writing a blank check to everyone who files a claim. There will always be claimants unhappy with a settlement even if it's exactly the coverage they paid for.

Of course for hail you need to consider paying for a hail resistant roof. (can pay for itself with 2 hail storms) In particular with 1% deductables which are now required. Since my father put a metal roof on the house I inherited, the neighbors have replaced roofs 2 times, and in the 16 years before that the roof got damaged to the point of replacement twice (the second time he went to metal). In addition if your willing to accept cosmetic damage (i.e. dings in the roof), you get a discount.

 

[Sojourner]

OP here. Thanks for the responses so far. As I mentioned, I'm leaning towards going with Allstate due to the lower premium, especially since I recently had my roof replaced and am not expecting any major HO claims over the next few years. Of course, you never know—there could always be something that happens out of the blue. But even if it does, I would suspect that Allstate's claims process couldn't be too awful. They scored among the top third of all insurance companies in the 2017 J.D. Power rankings (linked to in post #4 above).

 

[swakyaby]

We had Allstate for 17 years for home and 2 autos. We never made a claim or any claim inquiries. Yet, for the last 5 years we were clients, they raised our HO insurance 10% each year. So DH, who worked in construction, would call, have a lengthy conversation with the Allstate agent, and finally get a reduced increase in premium. It got tiresome. Finally 5 years ago, we switched to AAA and insured our home and now 3 vehicles. Allstate called us 3 times to try to get us to come back. So your reduced premium may be short-lived unless you’re willing to dispute the yearly increase in premiums every year.

 

[meierlde]

We had Allstate for 17 years for home and 2 autos. We never made a claim or any claim inquiries. Yet, for the last 5 years we were clients, they raised our HO insurance 10% each year. So DH, who worked in construction, would call, have a lengthy conversation with the Allstate agent, and finally get a reduced increase in premium. It got tiresome. Finally 5 years ago, we switched to AAA and insured our home and now 3 vehicles. Allstate called us 3 times to try to get us to come back. So your reduced premium may be short-lived unless you’re willing to dispute the yearly increase in premiums every year.

One question how much of the increase was due to increase in construction costs? Often a good piece may be due to that, check the limits on the policy from year to year and compare their increase to the increase in premiums. This automatic increase is designed to keep your limit above the limit where the coverage changes to an actual depreciated value from replacement cost (read policies to see differences)

 

[badatmath]

The last thing I would want is bad claims service on top of a loss. It would be stressful enough to have your house burn down without having to argue every step of the way while you are fighting to rebuild and living in a hotel room. . . .

 

[meierlde]

One question how much of the increase was due to increase in construction costs? Often a good piece may be due to that, check the limits on the policy from year to year and compare their increase to the increase in premiums. This automatic increase is designed to keep your limit above the limit where the coverage changes to an actual depreciated value from replacement cost (read policies to see differences)

Note that every so often you read about a person whose house burned down but had 20 year old limits on their policy, so that they did not get enough to rebuild. There was a story about a Serbian orthodox cathedral in Manhattan that burned down and would cost about $60 million to rebuild but the insurance company would only pay $12.5 million. The article did not say what the limits on the insurance policy were. (The fire is actually in a video on youtube).

 

[Scuba]

We too have Allstate and have been with them for many years (15-20). The agent we deal with has a bricks & mortar location in our neighborhood, and we can actually talk directly with him when questions or issues come up. However, premiums have increased in particular on our homeowners so I am considering doing a competitive bid on the bundle (homeowners, auto, umbrella) to see whether our pricing is in line or not with competitive offerings.

What is the easiest/best way to get competitive quotes and to make sure the quotes are for comparable coverage/deductibles/etc.?

 

[meierlde]

We too have Allstate and have been with them for many years (15-20). The agent we deal with has a bricks & mortar location in our neighborhood, and we can actually talk directly with him when questions or issues come up. However, premiums have increased in particular on our homeowners so I am considering doing a competitive bid on the bundle (homeowners, auto, umbrella) to see whether our pricing is in line or not with competitive offerings.

What is the easiest/best way to get competitive quotes and to make sure the quotes are for comparable coverage/deductibles/etc.?

Assuming your current limits are more or less up to date, you could then ask for the same limits adjusted for their inflation adjustments for the year from each. Find your current policy and note its limits. If they have not been adjusted recently they the best bet would be to discuss the issue with each agent. Ask for the quote to include the limits. Also decide if its time to increase deductibles on both the auto and home damages section.

 

[swaneesr]

What is the easiest/best way to get competitive quotes and to make sure the quotes are for comparable coverage/deductibles/etc.?

Easiest way is to start online. Pull your old policy details and fill out the information to get online quotes. I think you will be surprised at the ease of getting an online quote. Last time I did this I actually ended up calling and working with an agent online.

Local independent agents you can start on the phone. However, it is best to make an appointment and bring all your current policy documents.

At least this is my plan for later this year.

Swanee

 

[athena53]

Assuming your current limits are more or less up to date, you could then ask for the same limits adjusted for their inflation adjustments for the year from each. Find your current policy and note its limits. If they have not been adjusted recently they the best bet would be to discuss the issue with each agent. Ask for the quote to include the limits. Also decide if its time to increase deductibles on both the auto and home damages section.

Be careful about this part. I got a competing quote 2 years after DH and I bought the house and the market was fairly stagnant, so got the quote for the same policy limit. The premium was lower so I went with the new company. THEN they did a drive-by evaluation of the house and upped the limit by at least 20%- I forget the actual number- and the "savings" disappeared. It was Replacement coverage (what it would cost to rebuild the whole thing in case of a total loss), so hard to compare with market value and thus hard to refute. Make sure they're not planning to see if the limits need adjusting AFTER the policy is effective.

 

[meierlde]

Be careful about this part. I got a competing quote 2 years after DH and I bought the house and the market was fairly stagnant, so got the quote for the same policy limit. The premium was lower so I went with the new company. THEN they did a drive-by evaluation of the house and upped the limit by at least 20%- I forget the actual number- and the "savings" disappeared. It was Replacement coverage (what it would cost to rebuild the whole thing in case of a total loss), so hard to compare with market value and thus hard to refute. Make sure they're not planning to see if the limits need adjusting AFTER the policy is effective.

One other comment you might ask for a copy of the policy form, i.e. the thick document not the declarations page. Then read it to see in detail what is and is not covered. I agree the issue is the cost to replace not he market value which can be significantly lower.

 

[athena53]

One other comment you might ask for a copy of the policy form, i.e. the thick document not the declarations page. Then read it to see in detail what is and is not covered.

One very interesting article I read in the CPCU journal years ago discussed the differences in Auto policies. Most of the major companies use standard forms issued by ISO (Insurance Services Office) so they provide the same coverage, but some of the highly-discounted companies shave off bits of coverage here and there. An example was liability coverage for a rental car; I believe the standard forms still cover if you rent a car, then let your friend drive it and the friend gives the keys to another friend who gets in an accident. The discounted policy did not. I'm sure the same differences exist among Homeowners policies.

A good agent should be able to tell you about the differences, but they're becoming an endangered species. Companies are slicing commissions down to the bone to be competitive with on-line issuers. My agent just let one person on his staff go and his house is on the market because he and his wife are downsizing to cut costs.

 

[akck]

We too have Allstate and have been with them for many years (15-20). The agent we deal with has a bricks & mortar location in our neighborhood, and we can actually talk directly with him when questions or issues come up. However, premiums have increased in particular on our homeowners so I am considering doing a competitive bid on the bundle (homeowners, auto, umbrella) to see whether our pricing is in line or not with competitive offerings.

What is the easiest/best way to get competitive quotes and to make sure the quotes are for comparable coverage/deductibles/etc.?

After Allstate sent me their policy renewal with another significant increase, I used the document and got online quotes with State Farm, Geico and Progressive. Two were significantly below Allstate’s cost. I was about to go with State Farm, but decided to give my independent agent a shot at a new quote. I assume they checked with the other companies they represent and one was lower than the State Farm quote for combined auto and HO. I stayed with my independent agent and my current policies have not gone up significantly and even went down a couple of years.