When comparing homeowners insurance companies, keep in mind that not all insurance companies are created equal.
In this article, learn about the worst homeowners insurance companies based on each company’s reputation, claims handling, coverage options, and customer experience.
According to the American Association for Justice (AAJ), these are the insurance companies in America. These carriers use questionable tactics to jack up premiums and avoid/delay paying valid claims.
The worst homeowners insurance companies
You need to know that many insurance providers are not on your side. Homeowners insurance is one of those necessities most people take for granted, but it’s important to have the right policy in case of an emergency.
Here are the 7 worst insurance companies in America:
Allstate is the worst insurance company in America. The company publicly states that policy holders are “in good hands”. But Allstate has faced criticism for using confusing policy language and denying claims. Allstate is one of the worst homeowners insurance companies. Allstate rates are high and they don’t always cover all risks.
Other tactics used by insurance companies include misrepresenting claimants’ rights and suggesting that claimants will get less money if they retain a lawyer. Allstate has also been known to deny claims and increase rates after a claim has been filed.
The name Allstate’s game is deny, delay, and defend to avoid paying claims. At Allstate, corporate training manuals explain how to avoid payments. Adjusters who deny the most claims are rewarded. And document shredding pizza parties are standard practice.
Despite civil and criminal legal issues, the world’s biggest insurer, AIG continues to employ tactics to maximize claim denials. AIG also has a reputation for not playing fairly in court.
One of the reasons that AIG is ranked as one of the worst homeowners insurance companies is their unwillingness to pay claims. Their low payout ratio means that they are likely to deny claims and leave policyholders without any recourse if something goes wrong.
The bottom line is that insurance carriers make more money when they deny valid claims. AIG has a reputation for being one of the worst insurers for claims denial. If you have a claim that you feel is warranted, be prepared to fight for it tooth and nail!
AIG executives also seek price increases during catastrophes. AIG has also been labeled “the new Enron” due to multi-billion dollar corporate fraud charges.
3. State Farm
State Farm, the largest property casualty insurance company in America, goes to extreme lengths to delay and deny claims. After Hurricane Katrina, State Farm reportedly altered engineering reports. They have also forged signatures on earthquake waivers.
Hurricane Katrina also highlighted State Farm’s use anti-concurrent clauses, which leads policyholders into believing they are covered from the risks of hurricanes, when subsequent flooding may wipe out any chance of a claim being paid. They don’t really want you to know what coverage you have.
In 1999, after a series of powerful tornadoes in Oklahoma, homeowners brought a class-action suit against State Farm. A jury ruled that State Farm disregarded its duty to policyholders and acted “with malice” and “recklessly”.
State Farm has a rating of only 2 out of 5 stars from the Better Business Bureau (BBB). This low rating is because State Farm has a history of not paying claims on time. In fact, State Farm has been known to take up to two years to pay claims.
The Farmers insurance company has specific tactics to delay and limit payments to claimants. Adjusters that minimize claim payments also receive pay increases, bonuses, and other perks.
Farmers’ parent company, Zurich Financial Services, has paid out almost half a billion dollars to settle price-fixing and bid-rigging cases.
In 2007, California regulators found that some Farmers customers who filed claims faced premium hikes and insurance nonrenewal just by using their insurance for its intended purpose. Farmers did not admit any wrongdoing but agreed to pay $2 million in administrative fines and refunded policyholders $1.4 million.
Farmers consistently ranks at the bottom of homeowner satisfaction surveys from JD Powers and Consumer Reports.
5. Liberty Mutual
Liberty Mutual insurance is known for denying valid claims and delaying claim payments. Liberty Mutual has also refused renewal to clients in high-risk areas such as those susceptible to hurricanes or floods.
If you want to find a good homeowners insurance company, look for one that has a good reputation. Liberty Mutual is not one of these companies.
Like State Farm and Allstate, Liberty Mutual hired McKinsey & Co. to adopt deny, delay,
and defend tactics. Regulators have alleged that the company has also indulged in systematic bid-rigging.
Liberty Mutual is facing litigation from its vendors who state that the company’s cost-cutting has resulted in a spike in lawsuits due to poor claims processing.
USAA is another insurance company that is notorious for delaying claim processing. Claimants are much more likely to accept low offers when under financial pressure.
They also have a 1.2 out of 5 star rating from the BBB. This is due to their denying valid claims without any explanation. This practice is prevalent throughout the insurance industry.
USAA also has a history of charging high premiums and not paying claims on time.
Despite their cheery commercials, Progressive insurance has a terrible reputation for denying claims and for giving unfair rates to their customers.
One of the ways that Progressive denies claims is by refusing to pay for damage that was caused by natural disasters like floods or hurricanes. This means that many customers who have been hit by these types of disasters are left with huge bills that they can’t afford to pay.
Progressive has faced several bad faith insurance claims brought by claimants and policyholders. In some cases, Progressive allegedly failed to effectively settle claims that involve severe injuries to children.
Progressive bad reputation and high rates leaves its policyholders out in the cold.
How to Save Money on Homeowners Insurance
There are a few things that you can do to save money on homeowners insurance. The first thing that you can do is to check your coverage. Make sure that you have the proper amount of coverage for your home and property. You may also want to consider bundling your insurance with other products, such as car or life insurance. This will give you a better overall rate.
Another way to save money on homeowners insurance is to shop around. There are a number of good providers out there, and it is worth taking the time to compare rates before settling on a policy. You can also try negotiating a lower rate with your current provider.
Did you know?
According to the American Association for Justice (AAJ), the insurance industry earns 1 trillion dollars annually in premiums.
The Bottom Line
Some insurance companies employ dubious strategies to avoid paying legitimate claims. Before purchasing or renewing your coverage, compare insurers. Consider coverage, pricing, claims processing, and customer satisfaction ratings to find the best homeowners insurance providers.