California Home Insurance Company Reviews: Worst Complaint Ratings

Here are homeowners insurance companies, among the biggest 50 home insurance companies in California, which have a higher than average annual number of homeowners insurance complaints in 2008, 2009, & 2010, based on their market share, than the other top 50 homeowners insurance companies.

Why is a home insurance company’s market share important when considering the number of complaints?

Let’s look at this example:

Company A has a 1,000,000 customers and 10 complaints.

Company B has 100,000 customers and 3 complaints.

Company B may seem to have the better complaint record, but it also has much less customers than Company A.

A better way to look at it is this way: Company A has 1 complaint per 100,000 customers, and Company B has 3 complaints per 100,000 customers.

So, any one customer, trying to choose an home insurance company, may be more concerned with the complaint record of Company B.

However, the company’s complaint record is only a launching point for further research. I recommend shopping on the basis of getting the coverage you need at the best price, and then, if the complaint record is a concern for you, investigate the reason for the complaint.

I give insurance companies and “F” grade if they have double or more the average number of complaints, adjusted for market share.

But, for example, the reason for the high number of complaints might be a computer error in their billing system, causing cancel notices allowing only 19 days to pay the bill, to avoid canceling for nonpayment, instead of the 20 days required by state law (I’m making up this example, so please don’t assume 20 days notice for canceling your home insurance for nonpayment IS your state law). This is a minor complaint, which needs to be corrected nonetheless, but not as much of a concern as an insurance company with complaints regarding something more serious, like unfair claims settlement.

Also, any insurance company can have an off year. Small insurance companies can go from a year with no complaints, to a year with one complaint, but because of their small market share, the one complaint gives them a higher than average complaint record/ratio/index.

The largest homeowners insurance company has only around 20% (my guess-timate) of the market, double its nearest competitor (again, my guess-timate), with most of the 50 largest homeowners insurance companies having only a small percentage of the market. Rather than 5 or so insurance companies dominating the market, there are lots of insurance companies with relatively small market shares, even though they advertise on TV, or have brand recognition with the public.

However, even very few complaints should be a concern to a customer. These are not frivolous complaints, such as the hundreds of complaints every insurance company receives about the cost of insurance, rate increases, and legal underwriting practices. These are complaints made to the State’s department of insurance, and the state required the insurance company to correct their behavior.

I try to be fair, in developing this list, by only including insurance companies having higher than average complaints for each of the last 3 years: 2008, 2009, & 2010. But if you are insured with any of these insurance companies, or if you wish to insure with them, find out more information about the complaints before deciding you don’t want to insure with them.

I list separately 4 insurance companies with high complaint records for homeowners insurance (3 of these insurance companies received my “F” grade in each of the last 3 years), based on market share, which should be a concern for anyone insuring with these companies. Be sure to review this list at the end of this blog post. If you are insured with any of these insurance companies, you will want to find out more from your agent or insurance company about the reason for the complaints.

The California Department of Insurance website is the source of my information about market share & complaint information. This website has great information for California residents about insurance, and you can use it to find out more information about the insurance companies I discuss in this blog post (and other insurance companies, too). Insurance companies frequently have several subsidiary homeowners insurance companies. Make sure you know the correct name of the insurance subsidiary quoting or insuring you, to see if they are any of the companies on this list.

California Homeowners Insurance Companies with a higher than average complaint index for 2008, 2009 & 2010 (in no particular order)

Travelers Commercial Insurance Company

Fidelity National Insurance Company

Tower Insurance Company of New York

Federal Insurance Company (Chubb)

Newport Insurance Company

Homesite Insurance Company of California

Homeowners Insurance Companies in California with high complaint records (in no particular order)

Newport Insurance Company

Homesite Insurance Company of California

American Bankers Insurance Company of Florida

Note: American Bankers had no complaints in 2009 or 2008, then had 4 complaints in 2010, giving them a failing grade for their 2010 complaint index. 4 complaints may not seem like a lot, but I encourage customers to find out more about the nature of these complaints.

Tower Insurance Company of New York

Note: Tower’s complaint record has been getting better over the last 3 years, and I think it is because it has been gaining market share. In 2010, it still had a lot of complaints relative to its size. I recommend finding out more about the nature of the complaints before you decide to insure, or not insure with them.

Many people pay too much for their insurance because they never shop for better rates, or if they do shop, they don’t check the rates of enough companies. For a lot of people, the best insurance company is the one with the lowest rates. The ad below will take you to links to get online quotes from major Home, Auto, Health, & Life insurance companies in your area. Choose the type of insurance, put in your zip, and start shopping now!

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