Finding the best auto insurance is more than just a numbers game. You might assume that you will get the best coverage at the best price from the largest auto insurance companies. In many cases, that is true. But while price matters, it should never be your only consideration. What about customer satisfaction? A market-leading insurance company might have hundreds of thousands of customers, but are those customers satisfied? Would they recommend their car insurance company to a friend?
When it comes to auto insurance companies, bigger is not always better. The best auto insurance companies are those that are able to provide a satisfying combination of competitive pricing, flexible and comprehensive coverage options, excellent customer service, a hassle-free shopping experience, and strong financial underpinning. Without these characteristics, bigger might mean distant, inflexible, difficult to work with—and at worst—unable to pay claims.
Why Is Customer Satisfaction Important?
If customers stay with a car insurance company year after year, that says something. If one claim has them running for the hills, that says something too. Choosing a car insurance company that offers the lowest price and easiest shopping experience is a natural inclination. But remember, the company you choose for price alone may not be the one you stick with.
Customer satisfaction rates are typically available for most large car insurance companies, and are a great way to preview the experience that you might expect. For most people, getting into an auto accident is stressful. If your car insurance company makes it worse, you probably won’t hang around at renewal time, let alone recommend the company to a friend.
Most people want friendly, responsive customer service representatives, minimal hassles, and a quick resolution to their problems. If you have to sit on hold for an hour before you can even talk to someone, your satisfaction has already taken a beating before you actually receive any service. If your claims experience isn't very good, it might be time to shop around.
Largest Auto Insurance Companies by Market Share
Ten large insurers dominate the car insurance market. Some do a great job of keeping customers satisfied. Others don’t, and probably see a great deal of customer turnover as a result.
A large market share definitely does not equate to high customer satisfaction, although customer satisfaction does play a role in achieving and retaining a dominant place in the market.
The largest auto insurance companies in the U.S. by market share in 2015 were:
- State Farm, 18.3%
- Berkshire Hathaway, Inc. (Geico), 11.4%
- Allstate, 10%
- Progressive, 8.8%
- Farmers Insurance, 5.3%
- USAA Insurance, 5%
- Liberty Mutual, 5%
- Nationwide, 3.7%
- American Family, 1.9%
- Travelers, 1.7%
Source: SNL Financial, Insurance Information Institute
Shopping Experience Influences Customer Satisfaction
Customer satisfaction rates vary for the largest car insurance companies. J.D. Power surveyed auto insurance companies and found that shopping experience and claims experience were the greatest influencers of customer satisfaction.
According to the J.D. Power report, Erie Insurance and Liberty Mutual are tied for providing the most satisfying purchase experience, followed by The Hartford in third place. All three of these auto insurance companies achieved J.D. Power’s highest satisfaction ranking, “Among the best.” Of these three, only Liberty Mutual ranked in the top ten for market share.
The survey found that many shoppers (74%) do research and obtain quotes online, but only 25% actually purchase their policies online. After getting quotes and researching policy options, 50% of shoppers go on to purchase their policies through agents. Many customers want the convenient online shopping typically offered by larger insurers, combined with the opportunity to visit with local agents or obtain professional advice to ensure that they are making the best choice and getting the right coverage. The insurance companies that offer the best balance of convenient online quoting, well-differentiated products and personal, professional service score high in shopping experience satisfaction.
Several other large insurance companies were included in the shopping experience survey. Here is how they fared:
- American Family: “Better than most”
- State Farm: “Better than most”
- Travelers Insurance: “Better than most”
- Farmers Insurance: “About average”
- Geico: “The rest”
- Progressive: “The rest”
- Allstate: “The rest”
“The rest” is J.D. Power’s lowest satisfaction ranking.
Claims Experience Can Make or Break Customer Satisfaction
J.D. Power also measured customer satisfaction for claims experience. Customers were asked about six aspects of the claims process, and the insurance company was then awarded an overall satisfaction score.
The survey confirmed that claims experience has an impact on customer retention and referrals. Among respondents who were highly satisfied with their claims experience, 83% said they will “definitely renew” their auto insurance policy, and 84% said they “definitely will” recommend their auto insurance company to others.
The highest score for claims satisfaction was rewarded to Auto-Owners Insurance, with Amica Insurance in second place. Both insurers garnered J.D. Power’s “Among the best” ranking.
Auto Club of Southern California Insurance Group, The Hartford, and Nationwide Insurance earned a “Better than most” ranking.
Several other large auto insurance companies earned “About average” rankings for claims satisfaction:
- American Family
- Farmers Insurance
- State Farm
- Travelers Insurance
The J.D. Power survey indicates that, in general, the largest auto insurance companies are not garnering the highest customer satisfaction rankings for claims experience. While a few perform very well, others do not. The consumers who were surveyed desired a variety of options for reporting a claim and communicating during the claims process. Companies that scored highest for satisfaction offered a variety of options, from phoning an agent to online reporting capabilities and email and text communication options. Consumers were most satisfied when they could communicate quickly and conveniently using technology, but also received personal, proactive phone calls from their insurance company or agent.
The companies that provided the best mix of online or other technology options coupled with personal service fared the best.
Advantages of Large Auto Insurance Companies
Large insurance companies of course offer a variety of advantages, including:
- 24/7 service
- Broad geographical representation
- Many coverage options for all kinds of drivers
- Financial strength
- More ways to contact them and make claims
- Online shopping with numerous ways to get quotes and buy coverage
Large auto insurance companies often offer more than just insurance for your car. Many large companies can bundle policies for all of your household insurance needs (auto, home, life, and more) while offering discounts and competitive pricing for all of them. Often the more policies you buy, the more you save.
Advantages of Small Auto Insurance Companies
Small insurance companies also offer advantages and should be seriously considered if they offer the coverage you need at a competitive price. Smaller companies can often provide better, more satisfying customer service and even a convenient shopping experience. Consider the following advantages of purchasing auto insurance from a smaller carrier:
- Personal customer service
- Local or regional specialization/expertise
- Competitive rates
- Special discounts
- Special coverage for certain types of cars or drivers
Choosing the Right Auto Insurance Coverage
It is important to determine what types of auto insurance coverage you need and the amount of coverage you need before you sign on the dotted line with any insurance company, no matter the size. If you shop online, you might compare quotes from several companies and be tempted to choose the cheapest. But remember to make sure you are evaluating apples-to-apples coverage. The cheapest auto insurance quotes might be for bare-bones coverage, leaving you with much higher out-of-pocket expenses if you have to file a claim.
You should be sure that your auto insurance company offers a variety of coverage options, and has a flexible program of discounts and payment methods that suit your needs.
While shopping online for auto insurance may be convenient, an independent insurance agent is still the best option for shopping for car insurance. An independent agent will get to know you and your family, and can help you understand your quotes and make the best choice.
With an independent Trusted Choice® insurance agent, you can still obtain multiple quotes from numerous highly rated insurance companies. And you will also know that you have someone in your corner when you need advice or have to file a claim.
Finally, before choosing any car insurance company, take a look at its customer satisfaction data. You might just save yourself from a hassle or unpleasant experience in the future.
Find a local Trusted Choice agent today and start shopping for car insurance.