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Study: Costs Rise, But Americans Happier With Auto Insurance

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With initial damage estimates for Hurricane Sandy pegged at $20 billion or more, insurance companies are facing a very busy couple of weeks. But while they brace for massive payouts, agencies can take heart in one bit of very good news, courtesy of  J.D. Power and Associates' 2012 U.S. Auto Claims Satisfaction Study -- namely, that Americans have become more satisfied with their auto insurance companies, even as out-of-pocket costs have risen.

To reach those conclusions, Power surveyed over 12,508 insurance customers who had filed and settled claims within the past six months. The survey took place over an 11-month period, from November 2011 to September 2012.

(Power noted that the survey focused on customers whose vehicles were significantly damaged; those with damage to their car's glass or who only filed claims for roadside assistance were excluded. Stolen vehicles were also excluded.)

Survey participants were asked to rate satisfaction with their insurance company in six areas: "first notice of loss; service interaction; appraisal; repair process; rental experience; and settlement". Scores were doled out on a scale of 0 to 1,000. Here are the major takeaways:

  • Satisfaction improved by six points from last year: the average overall score for 2012 was 852.
  • When it comes to settlement -- arguably the most important factor -- average scores were up nine points from 2011, resting at 846.
  • Interestingly, those who filed total-loss claims were even happier with their settlements: for them, scores were 16 points higher. That could be due to the fact that payouts for total losses were up an average of $690 from last year -- mostly because of sky-high used-car values.
  • Satisfaction might also be rising because the insured feel like the claims process is more transparent. This year, 64% of those surveyed said that their insurer offered ways to keep them informed of their claim's progress (via online updates and such). In 2011, that figure was 61%.
  • Curiously, satisfaction grew even as out-of-pocket expenses crept upward. On average, respondents paid $403 for deductibles, rentals, and other uncovered expenses, which is up $26 from 2011.
  • America's favorite insurance company is Auto-Owners Insurance, which earned the highest overall score (887) for the fifth straight year. Rounding out the top five were Amica Mutual and Erie Insurance (tied at 876), and Automobile Club of Southern California and COUNTRY (tied at 874).
  • At the other end of the scale, Commerce was America's least-favorite agency, with a score of (781). Esurance fared slightly better (801), as did Encompass (820), 21st Century (821), and Mercury (824).
  • National heavy-hitters were all over the map: State Farm (868), Allstate (863), and Travelers (857) came in above the industry average of 852. Nationwide (848), GEICO (842), Progressive (842), and Farmers (838) didn't.

If you'd like a look at the management discussion of the J.D. Power report (which is less about rankings and more about consumer theory), you can find the PDF here.

And if you happen to live along the eastern coast of the U.S., we hope you're safe and sound. We also hope that you don't have too much need for your insurer, but if you do, we hope the claims process goes smoothly.

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