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Best renters insurance companies

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USAA, The Hartford, American Family and Erie lead the pack of best renters insurance companies, according to the latest customer survey study by J.D. Power.

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The best renters insurance companies excel in customer service as well as the following factors, says Valerie Monet, director of insurance practice at J.D. Power.

  • Limit customer-reported problems
  • Limit insurer-initiated premium increases
  • Ensure customers "completely" understand policy and what it covers
  • Provide customers with tools to inventory possessions
  • Provide one or more policy discounts

The J.D. Power 2016 U.S. Home Insurance Study reports results from interviews with homeowners and renters about their experiences with their insurance companies. Insurers were ranked on a 1,000-point scale to determine the best renters insurance companies and home insurance companies.

The study examined five factors:

  • policy offerings
  • policy price
  • the billing process
  • policy information
  • claim processing

The best renters insurance companies scores:

  1. 1.The Hartford -- 841
  2. American Family -- 836
  3. Erie Insurance -- 834
  4. State Farm -- 832
  5. Allstate -- 829
  6. Progressive -- 825
  7. Auto Club of Southern California Insurance Group -- 821
  8. GEICO -- 820
  9. Nationwide -- 817
  10. Farmers -- 815
  11. MetLife -- 815
  12. CSAA Insurance Group -- 812
  13. Liberty Mutual -- 812
  14. Safeco -- 801
  15. Travelers -- 788

USAA earned a class leading 898 points but is excluded from the rankings as it only services military personal and their families. The industry average worked out to 825.

A 2015 Insurance Information Institute (III) poll found that while 95 percent of homeowners had homeowners insurance, only 40 percent of renters said they had a renters insurance policy.

This can be a very expensive mistake. A burst pipe, severe weather or a fire can quickly destroy most of your possessions, and if you don't have renters insurance, you will be on the hook for the cost to replace your items.

"Most people underestimate the amount of personal property they have. When determining the cost of contents, renters should consider how much it would cost to replace every single thing they own," says Bill Gatewood, corporate vice rresident and director of personal insurance at Burns & Wilcox.

Customer service is king for best renters insurance companies

The study found that while pricing has been a big factor in the past, rates have remained stable over the past few years with the average annual premium for renters insurance staying around $259

Since insurers can no longer compete on price, they are looking for other ways to draw in new customers and keep their current customers happy.

Insurers have shifted their competitive focus to improving communication, process efficiency, and being easier to work with as a way to solidify and grow their business, says Monet.

Insurance companies that focus on providing a highly satisfying service interaction experience ranked well in the study, says Monet. "Service interactions are the largest driver of satisfaction - 31 percent. So a service interaction can either make or break a customer's perception of their carrier."

Service interaction isn't the only factor that is important, however. "Policy offerings, billing and policy information are also leading drivers, each one accounts for 23 percent of what drives renters' customer satisfaction, she says.

Apparently, consumers love the changes. Overall customer satisfaction with renters insurance companies is up 17 points from 2015. Satisfaction with price went up 16 points but the major increase came in satisfaction with policy offerings, which shot up 25 points this year. Satisfaction also went up in the communication rankings and satisfaction with claims.

The Hartford scored extremely well in almost every category that was factored into the scores. "The Hartford clearly outperforms the industry in interaction, policy offerings, and billing and policy Information," says Monet.

Happy customers tend to buy more insurance according to the J.D. Power report. "Customers don't often just pocket the savings that result from stable premiums. If they are happy with their current insurer, they will frequently modify their policy by increasing their coverage or purchasing additional insurance with the savings, such as adding riders for high-priced items like jewelry, artwork and family heirlooms," says Monet.

The report also found that when it comes to customer satisfaction, insurers still have some work to do, especially with Gen Y consumers. Those born between 1977 and 1994 have more contact with their agent than Baby Boomers (born 1946 to 1964) and are less satisfied overall with their agent experience.

Emerging trends: Online experience, new on-demand policies

Digital offerings are also having an impact on ratings as more consumers shop for and interact with their insurance completely online. "Digital practices are also differentiators," says Monet. According to Monet the following factors had an impact on scores:

  • Limited website problems
  • Allowing customers to access policy information online
  • Enabling customers to resolve issues via the website

New technology may also be a factor in customer satisfaction. J.D. Power predicts that on-demand insurance, which can be turned on and off using a smartphone will become popular in the United States and insurers will need to embrace new technologies and products to keep their customers (especially younger ones) satisfied.

"New entrants into the market, such as on-demand insurance, will likely result in shifts in customer expectations. Customer satisfaction is going to be more important than ever before for competitive position and growth," Monet said in the report.

How to find the best renters insurance companies 

Despite the fact that pricing has stabilized in the renters insurance market, shopping your coverage can often result in a lower premium. Insurance companies rate risk differently which can lead to dramatic differences in premiums.

While price is important, it's not the only consideration. "Don't shop entirely on price," advises Kathy McDonald, President of Global Specialty for Assurant. "If you have a claim, you want a quality company that will be there to help you out. Ask your apartment complex or friends for recommendations and research your options," says McDonald.

Bundling can help when it comes to price. "Many insurers offer significant discounts if you buy more than one policy, says Dondrell Swanson, a State Farm agent in Gilbert, Arizona. "For renters, this usually means bundling auto insurance with a renters policy, but life, business, and other plans may also qualify," says Swanson.

Discounts are extremely common in the renters' insurance market. According to Monet, 81 percent of renters' insurance customers report receiving some type of discount.

Tips for ensuring sufficient coverage and saving money

While price and customer satisfaction are always important factors in the perfect renters insurance policy, there are other factors your should consider. Here are a few tips for finding a great policy and saving some coin:

  • Raise you deductible, lower your cost: In general, renters insurance is very affordable but if your policy is a budget buster, don't drop your coverage, raise your deductible. The deductible is the amount you much cover before your insurer jumps in to pay out on a claim. The average deductible for renters insurance is $500-$1,000. "When choosing a deductible, think carefully about the out-of-pocket costs that you are willing - and able - to pay," advises Swanson. "A disciplined saver may be able to offset the greater risk of a high deductible with cash reserves. Others, however, will have to balance the benefit of a higher deductible against the risk of greater out-of-pocket expenses."

  • Replacement value vs. Actual cash value: Renters insurance comes in a couple of different flavors, replacement value and actual cash value. While a replacement value policy will be a bit more expensive, it will pay to replace your possessions with new ones of a similar quality. An actual cash value policy takes depreciation into account so there is a good chance the payout will not cover the cost to replace your lost possessions, especially if they are older.

  • Valuables have a cap: The majority of renters insurance policies have a cap on high value items such as jewelry, artwork, wine and other expensive collectibles. While the cap amount varies by policy, $1,500 is typical. If you have collectibles or jewelry that exceeds this amount you will need to purchase a rider or endorsement to up the coverage levels.

  • Choose the right liability coverage levels: The liability portion of a renters insurance policy protects you against bodily injury and property damage claims in the event someone is injured in your apartment. Choosing the right coverage limits is important. When it comes to liability limits on renters insurance, it depends on the profile of the client and their personal net worth," explains Gatewood. "Limits should be enough to cover the renter's personal assets. Many carriers offer options of $100,000, $300,000, and $500,000," says Gatewood. "When determining how much liability coverage to purchase, my answer is always, as much as you can afford. It is inexpensive and is one of the best values in the insurance market today," says Gatewood. Lawsuits can quickly turn expensive and without the proper liability coverage, all of your assets can be at risk.

  • Consider a personal umbrella policy: If you have a high net-worth or would just feel more secure with higher liability limits, consider an umbrella policy. Umbrellas are typically sold in $1million increments and are very affordable. They take over where your renter policy limits leave off. "Umbrella policies are great for people who have a dog," advises Gatewood. Dog bites can result in expensive medical bills as well as a lawsuit. If you end up on the losing end of a lawsuit a big judgment can be financially devastating.

  • Sharing with a roommate: While most insurance companies will allow roommates to share a policy, most experts don't recommend it. "We don't recommend sharing a policy," says Richard Lewis, digital marketing manager for Elephant Auto Insurance. "The reason being that your roommate's insurance claims go on your record, too, and, as a rule, it's best to establish your own insurance record," continues Lewis. It's important to remember that claims on your record will follow you for a number of years so if your roommate makes numerous claims on the policy, you could be paying a higher premium for quite awhile. If you decide to take the plunge and share a policy, have a serious discussion with your roommate about the details of the policy, the amount each person will pay for the policy and how any payout money will be divided if a claim is made.

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