Insurance contracts should be simple—you pick out a policy and diligently pay your premiums. When an accident occurs, you submit a claim and your insurer should pay out benefits according to the terms of the policy.
Unfortunately, the insurance industry routinely violates the rights of its policyholders. Things have historically been so bad that each state has a governmental agency dedicated to regulating the industry.
Have you ever wondered what are the worst insurance companies in the U.S.? Fortunately, the American Association for Justice (AAJ) compiled an extensive report of the ten worst car insurance companies in the U.S. Based on a thorough search of public documents, including court documents concerning lawsuits, the group identified the insurers that are most likely to deny claims and stiff their policyholders of much-needed benefits. Here we discuss the four auto insurance companies that topped the list of bad insurance companies and highlight some of the games that insurance companies play to shortchange policyholders.
Worst Insurance Companies in America
Most insurance companies are known for their claim denials. Surprisingly, some of the biggest offenders make well over a billion dollars in profits on policyholders' backs. Here are some of the biggest offenders:
1. ALLSTATE
This giant insurer took the top spot in the AAJ report as the worst insurance company because of its confrontational stance toward its own policyholders. As the AAJ report notes, this strategy was developed by consultancy firm McKinsey, as a way for Allstate to increase its profits. Unfortunately, McKinsey did not recommend that Allstate improve its service to win new customers and boost revenue.
Instead, Allstate's strategy for boosting profits includes:
- Making lowball settlement offers for far less than insurance claims are worth
- Refusing to budge from their initial settlement but instead taking cases to court (the so-called “boxing gloves” strategy)
- Delaying claims in the hopes that claimants become desperate and accept a low settlement
Texas also fined Allstate for overcharging consumers in the state for their homeowners' insurance policies—yet another way Allstate has tried to pad its bottom line using underhanded tactics.
2. STATE FARM
Located in Bloomington, Illinois, State Farm ranked #4 on AAJ's list for worst insurance companies. We want to highlight them, however, because they are one of the largest insurance providers of car insurance, which often comes into play after an accident. They also provide homeowners policies, which are frequently at issue in dog bite and premises liability claims.
Like Allstate, State Farm uses the 3D approach to its claims process—deny claims, delay any payment owed, and then defend with lawsuits. The company also has a history of failing to renew policies.
3. FARMERS
Based out of California, Farmers insurance is a provider of homeowners and auto insurance policies, and they are consistently ranked by consumers as one of the worst car insurance companies in the country.
Farmers made headlines when a 60-year-old woman in Washington got into a car accident, which left her in a coma for more than a week. Farmers initially denied her claim, arguing that the driver who hit her did so intentionally due to road rage. The Washington State Insurance Commissioner had to intervene before Farmers reversed course and paid out benefits.
4. LIBERTY MUTUAL
Liberty Mutual rounds out our list of worst insurance companies. Like Allstate and State Farm, Liberty Mutual also hired the same consulting firm Mckinsey & Co. And as they did with the other insurers, Mckinsey & Co. recommended that Liberty Mutual deny and delay as many claims and payments as possible, even valid claims.
Though not as infamous as some of the other auto insurance companies listed above, Liberty Mutual still has its fair share of complaints. Liberty Mutual has a history of facing litigation from policyholders. In addition to its deny, delay, and defend tactics, Liberty Mutual has also been accused of wrongfully denying policy renewal for policyholders considered at-risk of submitting claims.
Worst Car Insurance Companies Honorable Mentions
We'd be remiss if we didn't share the names of a few other insurance companies in America that were recognized among the worst insurance companies in the U.S. These include:
- Nationwide
- American Family
- Progressive
- GEICO
TOP AUTO INSURANCE COMPANIES BY USAGE
Due to the shady nature of the insurance industry, it can be difficult to choose an insurance provider you can trust. To help consumers with their decisions, J.D. Power undertakes an annual auto insurance study. The study determines each insurer's customer satisfaction level by examining five factors: billing process and policy information, claims, interaction, policy offerings, and price. The results are then tallied to determine the top insurance providers.
The following are the auto insurance brands with the most usage by region:
- California: Wawanesa
- Central: Shelter
- Florida: State Farm
- Mid-Atlantic: Erie Insurance
- New England: GEICO
- New York: New York Central Mutual
- North Central: Erie Insurance
- Northwest: The Hartford
- Southeast: Farm Bureau Insurance—Tennessee
- Southwest: State Farm
- Texas: Auto Club of Southern California (AAA)
ARE YOU STRUGGLING TO GET CLAIM PAID BY A BAD INSURANCE COMPANY?
Texas law provides ample rights to policyholders that should guarantee they are treated fairly. Unfortunately, many insurance adjusters still indulge in bad faith tactics, such as unnecessarily denying claims or refusing to pay benefits in a timely manner. This is where legal counsel is needed.
A skilled car accident attorney will handle disputes with insurance providers, whether it involves spearheading settlement negotiations or fighting for your rights in court.
The attorneys of DJC Law believe that consumers have the right to fair and fast payouts from insurance companies after a car accident. Our firm has sued many insurance companies, and we can fight to protect your right to compensation. Don't get duped by one of the worst car insurance companies in the country. For help with your case schedule a free case evaluation.