Posted : 10/02/2013
While homeownership may be the American dream, when it comes to home insurer satisfaction, renters are better off according to a recent J.D. Power survey.
Survey results indicate that renters are happier with their insurer than homeowners. Satisfaction among renters hit 809 on a 1,000-point scale compared with 787 for homeowners. The survey ranked five factors which included interactions, policy offerings, price, billing and payments as well as claims.
Why are renters so much happier? Like many things in life, price was a big factor. Renters simply feel their insurance is a better deal. Price satisfaction among renters was a significant 45 points higher than with homeowners.
It varies by location but in most cases, renters insurance is a bargain compared to homeowners insurance. The Insurance Information Institute reports that renters paid an average of $185 per year in 2010, a 0.5 percent rise from 2009. Homeowners on the other hand were forking out an average of $909, a 3.3 percent increase.
Statistics show that 25 percent of consumers currently rent their primary residence. The figure is even higher for residents of a major city according to the U.S. Census Bureau. In New York City almost 70 percent of the population rents, in Los Angeles it's 61 percent and in Chicago just over 55 percent are renters.
Surprisingly, despite the fact that renters can protect their possessions for roughly $200 a year, 46 percent of them don't have renters insurance.
According to Jeremy Bowler, senior director of the global insurance practice at J.D. Power, that number could change in the near future. "We think the 'take rate' on renters insurance is increasing," says Bowler. Three factors seem to be at play:
Price was not the only factor that renters deemed important. An easy to use website (22 percent) and online assistance (11 percent) ranked higher among renters than it did with homeowners. Bowler speculates that this may be due to the fact that renters tend to be younger. Statistics back him up, according to the National Multi Housing Council (NMHC) 43 percent of renters are under the age of 30.
Renters also tend to be more loyal to their insurers, especially if they bundle their car insurance. The survey found that retention rates among renters who bundle was an astounding 91 percent, compared to only 67 percent for non-bundlers.
State Farm captures the largest share of the renters insurance market with 26 percent, Allstate was a distant second with 12 percent and USAA rounded out the top three with 10 percent. Despite dominating the market, State Farm did not bring in the highest customer satisfaction ratings.
Nationwide ranked number one among renters with a score of 823, thanks to outstanding customer service. According to Bowler, one of the key factors in their success is the proportion of customers who completely understand their bill. "Industry averages indicate that less than half of customers completely understand their bill, but with Nationwide customers that number is 74 percent."
American Family was second and the Automotive Club of Southern California was third. State Farm ranked fourth.
Homeowners ranked Amica Mutual highest when it came to customer satisfaction. Again, taking care of their customers helped push them to the top of the list. Survey respondents felt that Amica does a great job of "not dropping the ball."
State Farm ranked second followed by Auto-Owners Insurance.
If you are one of the 46 percent of renters who doesn't have renter's insurance, here are a few things to keep in mind:
Type of policy - There are two types of renter's insurance policies and knowing the difference will help you decide which is right for you:
What's covered: It will vary by policy but most renter policies protect more than your possessions. Usually they will pay for living expenses if you are displaced from your apartment due to covered events like a fire.
Liability coverage is also included, but coverage levels may be a bit low. Typical policies offer $100,000 but most experts recommend carrying $300,000. Liability will protect you if someone is injured in your home, for example tripping over a rug or falling down the stairs.
Policies often limit dollar amounts for certain items such as jewelry, furs, music and sports equipment. Consider a floater or rider to your policy to raise the coverage levels on these items if you feel it is necessary.
Lower your premiums - Here are a few quick tips to keep your premiums affordable:
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