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Home insurance customer satisfaction declines along with property values

Homeowners appear upset that their home insurance premiums haven't dropped along with their property values.

A survey of nearly 13,000 home insurance customers, conducted by J.D. Power and Associates, found that customer satisfaction with home insurers is at a five-year low. Overall satisfaction with home insurance companies averaged 750 on a 1,000 point scale, down 23 points from 2009.

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Confusing property values with insurance value

You may think that dissatisfied insurance customers are most often disgruntled about the way their claims were handled. But the real issue, says Jeremy Bowler, senior director of the insurance practice at J.D. Power, seems to be that their premiums didn’t do down when their homes lost value.

Most homeowners don't understand that their insurance companies are basing premiums on how much it would cost to rebuild their homes and replace their contents in the event of a disaster. "They don't set their policies based on what you could sell the home for today," Bowler explains. Read more about home insurance basics.

Amica ranks highest again

Amica Mutual, based in Lincoln, R.I., holds the highest customer satisfaction index ranking among home insurance companies for the ninth consecutive year. Bowler believes Amica retains its top spot because it markets policies on service, not price.

"They start out by making sure they're selling the right product to the customer rather than seeking to close the deal at any cost," Bowler observes.

Furthermore, if customers understand what they're buying, they’ll understand that losing 50 percent of their property value doesn’t mean they’ll receive a 50 percent price cut on home insurance.

Home insurance customers asking questions

The survey also found that customers who buy their home and auto insurance policies from the same company are notably more satisfied and likely to renew with their insurer compared with those who don't.

One promising finding of the survey is that more customers are seeking to educate themselves about their policies, says Bowler.  Nearly a third of the policyholders surveyed indicated they had recently contacted their home insurer regarding their policy coverage or renewals. The more educated homeowners are about their insurance policies, the more satisfied they will be, Bowler says.

home insurance satisfaction rankings

More from Beth Orenstein here

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