When deciding whether or not to buy a product or service from a business, cautious consumers check the Better Business Bureau rating for the business. Although I think there are other sources, such as the annual JD Power insurance studies, proving more useful rating information to the auto or home insurance customer, the complaint data provided by the Better Business Bureau (BBB) about major auto & home insurance companies can be another source of information to help people avoid insurance companies with too many complaints. This review will analyze the complaint data gathered by the Better Business Bureau for the last three years against the ten biggest auto & home insurance companies in the USA, and use it to show you which companies have a good, average, or bad complaint record. I’ll explain why people should not consider the BBB rating for an insurance company, and how I’ll use the number of complaints against each of the top ten companies, Allstate, State Farm, Liberty Mutual, Travelers, Nationwide, USAA, Farmers, American Family, Progressive & GEICO, to compare them and determine the companies with the best & worst complaint records.
Reviewing the Better Business Bureau Ratings & Complaint Data for the Top Ten Car & Homeowners Insurance Companies
The Council of Better Business Bureaus is the network hub for the many local Better Business Bureaus in the US and Canada. Better Business Bureaus assign letter grades to companies from A+ (highest) to F (lowest). The Better Business Bureau letter grades represent the BBB’s opinion of a business. In some cases, the grade of a business may be lowered if the Better Business Bureau does not have sufficient information about the business, despite requests for that information from the business. In reviewing the rating for the top ten auto & home insurance companies, it looks like non-response to only one or two complaints can result in a much lower grade. You can find out more here about the BBB grading criteria.
Why the Better Business Bureau ratings for insurance companies are not useful in helping you choose a good insurance company.
The Better Business Bureau has been criticized in recent years for providing better letter grades to those companies paying for BBB accreditation, as shown in this Slate article, “Is the Better Business Bureau a protection racket?” The good news is only a few of the top ten auto & home insurance companies are BBB accredited, and I did not see any bias in their ratings, based on their grades and number of reported complaints.
However, it seems a company resolving all validated complaints (valid as determined by the BBB), and if the company has a low volume of complaints for a company it’s size (as determined by BBB), the company will receive an “A+” grade. For insurance companies, this does not seem to me to be a reliable measure of customer satisfaction. It may be insurance companies are being compared to companies of a similar size in other industries, with a higher average number of valid complaints.
For example, Homesite Insurance, an home insurance company with a poor customer satisfaction record, as measured by JD Power, and a much higher average number of complaints, as measured by the National Association of Insurance Commissioners, has an A+ rating from the Better Business Bureau. You can find out more by reading my Homesite Insurance review, and you can see my analysis of the JD Power rating for Homesite Insurance.
Likewise, 21st Century auto insurance has an A+ rating with BBB, but much higher than average auto insurance complaint statistics for some of its subsidiaries, and low JD Power auto insurance customer satisfaction survey scores. You can read my review here of 21st Century auto insurance company, for more information about 21st Century’s complaint record and JD Power ratings.
Other companies, routinely scoring lower than average for auto or home insurance customer or claims satisfaction by JD Power, with higher than average complaint statistics as measured by state governmental agencies, are highly rated by the Better Business Bureau.
When people go to a third party to help them resolve a problem with their insurance company, they usually contact their state’s department of insurance, which regulates insurance company operation in the state where the customer resides. So, complaint data collected by the BBB may not be representative of the number of complaints against an insurance company.
Why the complaint data collected by the Better Business Bureau is useful.
Although most customer complaints are best directed toward a customer’s state department of insurance, and many customers are aware to do so, the Better Business Bureau is well-known, and a popular resource for filing company complaints. Some people contact their local Better Business Bureau, when they have an unresolved dispute or problem with their insurance company. If a customer is having so much trouble resolving an issue with their insurance company, they take the time to contact the Better Business Bureau about it, it’s a pretty good sign this customer is unhappy with the service provided by their insurance company. If a lot of complaints are made to the BBB about a company, in greater numbers than similar-sized insurance companies, it’s an indicator the company has more dissatisfied customers than some of its competitors.
It may not be easy for a consumer to know if an insurance company has a higher or lower number of BBB complaints compared to its competitors, so I’ll do the work for you, in this review. If you have any questions about the BBB rating or number of complaints for an auto or home insurance company not included in this review, contact me through my Facebook page or Twitter account (see the last paragraph below), and I’ll review it for you.
Below are the ten largest auto & home insurance companies in the USA, listed from biggest to smallest, as measured by auto insurance market share determined by direct written premiums in 2012 (Source: Insurance Information Institute insurance company rankings). I review the trustworthiness of each company’s BBB rating, and compare it’s complaint data to the other companies, adjusting for each company’s market share, to see if its performing better or worse for complaints than its competitors. I’ll use other sources, such as JD Power customer satisfaction scores, and aggregated complaint data from state insurance departments, to see if a company’s BBB complaint data is telling the same story about an insurance company’s customer service. You can find links to the other sources I use (The JD Power website & the NAIC website for complaint data) here.
I started gathering the BBB complaint information a few days ago, and I have already noticed a change in the number of complaints for each company today, so keep in mind the number of complaints for each company may change daily. The important thing to remember is not the exact number of complaints, but how they relate to each other. I totaled the number of complaints in the last three years for the companies reviewed, then used the relationship among their market shares to determine the number of complaints each company should have to be average. I use how much above, or how much below, each company’s actual number of complaints are, compared to each company’s expected average, to determine if a company’s BBB complaint record is better or worse than the other companies.
Better Business Bureau Rating for State Farm Insurance
State Farm is rated “B+” by the Better Business Bureau. State Farm had 1,728 complaints over the last three years, and 730 complaints in the last 12 months. The only reason for a lowered rating, according to the State Farm review on the BBB website, was a non-response to one of the 1,728 complaints it had in the last three years. 1,728 may seem like a lot of complaints, but given State Farm has nearly twice the US auto & home insurance market share as the next biggest competitor, Allstate, it’s a good complaint record, and consistent with its lower than average auto & home insurance complaint ratios gathered by the NAIC. GEICO had more complaints in the last three years than State Farm, but with less than half the number of customers. Allstate had about 10% less complaints than State Farm, but with about 50% less customers.
Bottom line: Ignore State Farm’s Better Business Bureau rating. State Farm’s number of BBB complaints, including the one unresolved complaint, should not be a cause for concern for customers or potential customers. Of all the companies in this review, State Farm had the lowest number of complaints, compared to its expected average.
Better Business Bureau Rating for Allstate Insurance
Allstate is rated “A” by the Better Business Bureau. Allstate had 1,542 complaints over the last three years, and 391 complaints in the last 12 months. The only reason for a lowered rating, according to the Allstate review on the BBB website, is the length of time Allstate took to resolve complaints. Allstate has a worse three year complaint record than State Farm, which is consistent with its auto & home insurance complaint ratios gathered by the NAIC. Allstate has a better BBB complaint record than GEICO, but somewhat worse than Progressive, when adjusted for Progressive’s lower market share.
Bottom line: Ignore Allstate’s Better Business Bureau rating. Allstate’s number of complaints are above its expected average, and combined with its slow response to resolve complaints, may be a cause of concern.
Better Business Bureau Rating for GEICO Insurance
GEICO is rated “D+” by the Better Business Bureau. GEICO had 1,759 complaints over the last three years, and 662 complaints in the last 12 months. The reasons for its poor BBB rating, according to the GEICO review on the BBB website, are 10 failure to respond to complaints filed with the BBB, and 84 complaints not resolved. GEICO has a slightly higher number of complaints than State Farm, a company with more than twice GEICO’s market share. Only Liberty Mutual has a higher percentage of complaints above its expected average than GEICO.
Bottom line: GEICO’s Better Business Bureau rating seems justified, and paints the company in a worse light than its usual JD Power ratings suggest. Most GEICO subsidiaries have a better than average number of complaints per NAIC statistics, except GEICO Indemnity Company, which has much worse than average complaint statistics. GEICO’s number of complaints are well above its expected average, and combined with its failure to resolve 84 complaints, customers and potential customers of GEICO should be concerned with its claims and customer service.
Better Business Bureau Rating for Progressive Insurance
Progressive Insurance is rated “A+” by the Better Business Bureau. Progressive had 1,235 complaints over the last three years, and 425 complaints in the last 12 months. It seems if an insurance company responds & resolves all complaints in a timely manner, it gets the highest rating from BBB. I can’t imagine the standard for each complaint is resolved to the customer’s satisfaction, and I’m sure all “good faith” attempts by a company to resolve a complaint counts as resolution. Progressive has a slightly higher number of complaints above its expected share of complaints.
Bottom line: Ignore Progressive’s Better Business Bureau rating. Progressive’s number of BBB complaints are slightly above its expected average. Progressive has many auto insurance subsidiaries, and many of them have average to below-average number of complaints, per NAIC statistics. JD Power ratings for Progressive usually fall in the average range.
Better Business Bureau Rating for Farmers Insurance Group
I could not find a BBB review and rating for Farmers Insurance Group as a whole. 21st Century has a review under Farmers Insurance Group, but the majority of auto & home insurance customers in the USA insured by Farmers, are insured under the Farmers brand name. Many Farmers agencies have BBB reviews and complaint information, and some of these agencies are accredited by BBB. If you are insured with Farmers or considering Farmers to insure you, check to see if your agent has any complaints on file with the Better Business Bureau. Regardless of accreditation or an A+ rating, I would be careful using any agent with a Better Business Bureau complaint. Agents are supposed to provide personal service to resolve complaints, set proper expectations, and keep problems for their customers from happening. Service has to be pretty bad for a customer to resort to contacting the Better Business Bureau, whether the complaint was resolved with the help of the BBB or not. It’s possible a customer filing a complaint is difficult with unrealistic expectations, and my have never gave the agent a chance to help them, before filing the complaint. You want to make sure this is the case, before choosing any agent.
Bottom line: There is no reliable BBB complaint information for Farmers Insurance, but check the BBB for complaints against your agent. You can my review here, to find out more about Farmers Insurance Customer Complaints.
Better Business Bureau Rating for Liberty Mutual Insurance
Liberty Mutual is rated “A+” by the Better Business Bureau. Liberty Mutual had 1,285 complaints over the last three years, and 434 complaints in the last 12 months. Once again, as with Progressive, it appears if an insurance company responds & resolves all complaints in a timely fashion, it gets the highest rating from BBB. As I warned with Progressive, I’m sure all “good faith” attempts by a company to resolve a complaint counts as a resolution. However, Liberty Mutual has a much higher number of complaints above its expected share of complaints, and has the highest percentage of complaints above its expected average.
Bottom line: Ignore Liberty Mutual’s Better Business Bureau rating. Liberty Mutuals’s number of BBB complaints are significantly above its expected average number of complaints. Liberty Mutual usually scores below average in JD Power insurance surveys, and is often one of the lower scoring companies.
Better Business Bureau Rating for USAA Insurance
USAA is rated “A+” by the Better Business Bureau. USAA had 870 complaints over the last three years, and 329 complaints in the last 12 months. USAA has a higher number of complaints above its expected share of complaints, but The home and auto insurance complaint statistics compiled by the NAIC are better than average, and USAA is often the highest scoring company for auto & insurance customer satisfaction & claims satisfaction in annual JD Power surveys. Eligibility for USAA is restricted to the military, their immediate family members, and honorably discharged veterans.
Bottom line: Ignore USAA’s Better Business Bureau rating, but there are other sources to support USAA deserving an A+ rating. Although the number of BBB complaints for USAA are significantly above its expected average number of complaints, USAA is highly rated by JD Power, usually out-scoring other auto & home companies in their annual insurance studies by a wide margin.
Better Business Bureau Rating for Nationwide Insurance
Nationwide is rated “A” by the Better Business Bureau. Nationwide Insurance had 354 complaints over the last three years, and 140 complaints in the last 12 months. Nationwide is one of the four companies in this review with a much lower number of complaints than its expected share of complaints. However, when it comes to NAIC complaint statistics and JD Power study scores, Nationwide usually scores average to below average.
Bottom line: Ignore Nationwide’s Better Business Bureau rating. Although the number of BBB complaints for Nationwide are below its expected average number of complaints, other sources indicate Nationwide performs closer to average for complaints & customer satisfaction.
Better Business Bureau Rating for Travelers Insurance
Travelers Insurance is rated “A” by the Better Business Bureau. Travelers had 433 complaints over the last three years, and 149 complaints in the last 12 months. Travelers is also one of the four companies in this review, with a lower number of complaints than its expected share of complaints. However, when it comes to NAIC complaint statistics and JD Power study scores, Travelers usually scores average to below average.
Bottom line: Ignore Travelers’ Better Business Bureau rating. Although the number of BBB complaints for Travelers Insurance are below its expected average number of complaints, other sources indicate Travelers auto & home insurance perform closer to average for complaints, customer satisfaction, & claims satisfaction.
Better Business Bureau Rating for American Family Insurance
American Family Insurance is rated “B+” by the Better Business Bureau. Travelers had 220 complaints over the last three years, and 86 complaints in the last 12 months. American Family is another one of the four companies in this review, with a lower number of complaints than its expected share of complaints. The reason for a lowered rating, according to the American Family review on the BBB website, were two failures to respond among the 220 complaints American Family received in the last three years. Per other sources, American Family is closer to an average performer, for complaints and customer satisfaction.
Bottom line: Ignore American Family’s Better Business Bureau rating. Although the number of BBB complaints for American Family Insurance are lower than its expected average number of complaints, other sources indicate American Family auto & home insurance perform closer to average for complaints, customer satisfaction, & claims satisfaction.
Review Summary of the Better Business Bureau Ratings for the Top Ten Auto & Home Insurance Companies
Better Business Bureau complaint data is another source I can use to evaluate companies in my insurance company reviews, but the information provided by the BBB about insurance companies is not useful to the individual consumer. If you choose an insurance company based on an A+ rating from the Better Business Bureau, you may regret it, because the BBB is not a reliable indicator of a company’s customer service. However, before you decide on an agent, if you decide to purchase your auto or home insurance from an agent instead of direct from the company, you may want to check to see if the agent has any complaints with your local BBB.
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