Whose ratings can you trust when comparing auto insurance?
To find the best auto insurance companies, we sifted through complaints at the Better Business Bureau, state insurance commissioners' websites and less weighty consumer sites like Epinions.com. We also verified companies' financial strength at all five major ratings agencies: A.M. Best, Fitch Ratings, Moody's, Standard & Poor's and Weiss Ratings. We gave the most weight to Weiss, which ConsumerReports.org says uses stricter ratings criteria than its competitors. Weiss also doesn't take payments from the companies it rates. ConsumerReports.org and J.D. Power and Associates judge car-insurance companies based on massive consumer surveys. We checked on lawsuits, too, including a report titled "The Ten Worst Insurance Companies in America" by the American Association for Justice (AAJ), a trial lawyers' organization.
Big auto insurers don't get the best reviews
A few car insurance companies emerge as obvious winners, and we found plenty of losers, many of them some of the most heavily advertised companies in America. AIG, for example, got bad reviews for its auto insurance, even before its near-collapse amid the U.S. economic meltdown in late 2008.
AIG sold its auto unit, 21st Century Insurance, to Zurich Financial Services in July 2009. Zurich owns Farmers Insurance, which gets below-average reviews from customers who report high auto insurance rates, a poor buying experience, billing problems and a poor claims process. Like AIG, Farmers makes the American Association for Justice's 10-worst list. This lawyers' group says that Farmers "offered pizza parties to adjusters who met low payment goals" and once denied the claim of Ethel Adams, a 60-year-old Washington state woman who was left comatose by a multicar pileup. In denying Adams coverage, the insurer said the incident wasn't an accident because the driver at fault had road rage, according to the AAJ. After considerable media attention, the company relented and granted Adams coverage, according to the Seattle Post-Intelligencer. In addition, 21st Century gets low scores in the latest auto insurance survey conducted by J.D. Power and Associates, which surveyed more than 25,000 policyholders.
Allstate is among the big-name insurance companies with the most complaints. The Better Business Bureau has received nearly 1,400 complaints about Allstate in the past three years (at its headquarters location alone), but the BBB still gives Allstate an A-plus overall rating because it says the company has properly responded to the complaints. However, various states have fined Allstate millions of dollars in connection with subpoenas and policyholder charges. AAJ says Allstate has tried to avoid paying claims by stalling so long that the claimant gives up, and the AAJ says Allstate is the worst insurance company in America. In the J.D. Power survey, however, Allstate falls solidly in the crowded middle of the pack for overall and claims satisfaction, with lower scores for its car insurance rates. Allstate lags in another major consumer survey, though, earning average marks for claims handling but below-average scores for sluggish claims payments and other problems.
Reviewers say they find problems with other big companies, too. Liberty Mutual makes AAJ's 10-worst list, and claimants say they've been pressured to use specific repair shops. Liberty also falls into the average group in the J.D. Power survey. Nationwide and American Family Mutual get mostly average ratings from J.D. Power as well, with American Family scoring above average for claims satisfaction, but in the AAJ report, some crash victims say these auto insurance companies pressured them to repair their cars with cheaper, nonoriginal parts.
Travelers Insurance gets average marks across the board in consumer surveys, and The Hartford rates above average for its claims service at J.D. Power and Associates, but ConsumerReports.org lists them as companies to avoid, because an unusually large number of policyholders report that their rates were raised after they made a claim.
Mercury Insurance, one of the biggest auto insurance companies in California (it also insures cars in 12 other states), earns the worst possible scores for everything to do with claims at J.D. Power and Associates. Mercury shares its last-place finish with 21st Century and Commerce Insurance. Mercury has paid $500,000 in fines since 2006 for violations of California insurance laws, the San Francisco Chronicle reports.
It seems that every 30 minutes there's another ad for Progressive or Geico on TV, yet neither are better rated in customer surveys than the companies identified in our best auto insurance section. Progressive falls solidly into the average group, although some posters at Epinions.com say Progressive offered them a low quote that didn't last. Geico has lifted its scores this year; it now ranks above average for overall satisfaction in J.D. Power and Associates' auto insurance satisfaction survey.