Do you tell your Facebook friends about how much you love your car insurance company – or sigh and shake your head in disgust whenever you get a bill? Believe it or not, your satisfaction or dissatisfaction with your car insurance is affected not only by your policy and company, but also by where you live.
For that reason, J.D. Power and Associates' U.S. Auto Insurance Study for the first time divided the United States into seven regions, measuring customer satisfaction and picking the top-rated insurers in each area. The 2012 version of the study was released in June.
“As a company, J.D. Power has started to develop more local-market-specific results, focusing on local market performance to provide better information for consumers when determining who they would like to do business with,” says Jeremy Bowler, senior director of the global insurance practice at J.D. Power and Associates, a market research company.
The state of car insurance satisfaction
Overall consumer satisfaction with car insurance companies has hit its highest level since the study began in 2000, according to J.D. Power. In the spring of 2012, the company surveyed 35,000 car insurance customers about:
- Customer interaction.
- Policy offerings.
- Billing and payment practices.
- Claim experience.
Satisfaction varied by region, according to the study. Customers in the Southeast expressed the highest satisfaction in all areas except price, while customers in the West were happiest with their rates.
However, except for two regions on either side of the country, overall satisfaction didn’t vary by more than about 10 points on a 1,000-point scale. “Customer satisfaction looks pretty stable around a majority of the U.S.,” Bowler says. “Customers are happy in Michigan and equally happy in Texas.”
However, there were two less-happy exceptions: California, which was designated as its own region, and the Northeast. “They’re the two sort of polar extremes,” says Bowler, noting that California lagged 30 points below the highest-rated region for overall satisfaction.
Why geography matters
So, why does geography play such a big role in car insurance satisfaction? One of the main reasons, according to Bowler, is the mix of companies selling insurance in each area.
“The Midwest has a number of really strong players like Auto-Owners Insurance and Erie Insurance who may not offer insurance in markets like California or Rhode Island or New York,” he says.
Other factors include the demographics of the customers in a certain area – for example, language barriers might pose difficulty for the multilingual population of California – and the effect of state laws on price and policy offerings.
In fact, California is one of the most heavily regulated states in the country for property and casualty insurance, according to Pete Moraga, a spokesman for the nonprofit Insurance Information Network of California.
“Often people will see national commercials on TV for auto insurers that offer products that may not be available in California or in their own state,” Moraga says. “But they need to understand that even though it might be a national auto insurance company, the oversight is state by state. So what might work in one state might not even be legal in another state.”
So, this year, consumers who want to see specifics on how an insurer and its competitors are rated by other consumers in their region can visit the J.D. Power website.
“Last year, I might have looked at AAA of Michigan and I was comparing (their score) with national averages,” says Bowler, who lives in Michigan. “This year … it’s a score relative to my geographic region – it's a local score. It’s more relevant data for the consumer.”
Shopping with your location in mind
Experts say it can pay to take your geography into account when shopping for new coverage or deciding whether to keep the car insurance you have. Here are some tips:
- Ask your neighbors.
“Ask around,” says Jeanne Salvatore, a spokeswoman for the nonprofit Insurance Information Institute. “Asking friends and relatives who their agent or broker is and who their insurance company is, and if they’ve been happy, is one of the best ways of finding a good insurer. It’s the same thing you do if you need a lawyer, a dentist or an accountant.”
After you gather recommendations, Salvatore says, check the track record of each company.
- Check a company’s performance in your area.
Even if you’re considering buying insurance from or you're already with a big national company such as State Farm, Progressive or GEICO, investigate what kind of customer satisfaction scores it earns from other consumers in your area. “Not every carrier is going to perform equally well around the country,” Bowler says.
- Don’t dismiss a company because you’ve never heard of it.
Each year, J.D. Power asks consumers to cite car insurance companies off the tops of their heads to test name recognition. But just because an insurer’s name is lodged in your brain doesn’t mean it’s better than a lesser-known insurer.“In any given state, there are literally hundreds of companies that provide car insurance,” Bowler says. “Often, the companies who are performing particularly well tend not to have that wide of an awareness.” So, he says, “have an open mind to a brand you don’t necessarily recognize.”
- Don’t worry about where a company is based.
The top-rated company in the California region is Wawanesa – a company whose name recognition isn't that high in California. The insurer is based in Canada.“It doesn’t matter where a company is headquartered,” Moraga says, as long as it's licensed to do business in your state. “If they are offering a great product to customers at a reasonable price -- and great service to back it up -- that’s a winning combination.”
- Check out the top-rated insurers in your region.
J.D. Power’s regional ratings of top car insurers for 2012 included some companies that weren’t ranked in previous years because they were too local. This includes companies that were named the top insurers in their regions – Texas Farm Bureau, which was the No. 1-rated provider in the Central region and Farm Bureau Insurance-Tennessee, the No. 1 provider in the Southeast region. Each of those insurers offers coverage in just one state.“Up to last year, it would have been less than useful for me to issue a public rating or website that directed you to a company that for 49 states was not willing to issue a quote,” Bowler says. But, now, he says, “as we have expanded the list of companies we profile, more and more we’re getting down to companies that are not national giants.”