Allstate promises satisfaction with auto insurance claims, but is there a catch?

Althea Chang

Allstate’s Claim Satisfaction Guarantee may sound like a win for the company’s auto insurance customers, but as with many promises, the details could make this apparently sweet deal seem a little sour.

Allstate currently offers customers in Georgia, Indiana, Michigan and Ohio a credit for auto insurance premiums paid if they’re unhappy with a claim-filing experience. The company is seeking approval from insurance regulators to offer the guarantee in all 50 states. In most cases, a policy credit equal to a customer’s auto insurance premium for a six-month or 12-month period is provided to a dissatisfied policyholder who’s covered by this guarantee.

Raising a red flag

Robert Hunter, director of insurance at the nonprofit Consumer Federation of America, says the Allstate guarantee should raise a red flag with consumers.

“It is an admission, it seems to me, of a growing public awareness of Allstate’s historic poor claims record and high complaint ratio,” Hunter says.

According to Allstate, the guarantee was not prompted by the number of customer complaints it has fielded about auto insurance claims.

“Allstate is focused on reinventing auto insurance, and this is another unique, customer-driven offering,” company spokeswoman Laura Strykowski says. “It’s an offering to our customers that demonstrates our commitment to providing them the high level of customer service that they expect from us.”

Still, Hunter is skeptical.

“The money will be ultimately paid by consumers, so rates will rise to cover it,” Hunter says.

How does the claim guarantee work?

For any reason, an Allstate customer who’s unhappy with the service received on a paid auto insurance claim can qualify for a premium credit. That’ll happen even if Allstate disagrees with the customer’s reasoning. The guarantee has been tacked on at no additional cost to standard auto insurance policies in the program’s four test states: Georgia, Indiana, Michigan and Ohio.

If your policy period ends before your credit is used, the company will decide whether to apply the credit to your next policy period or send you a check.

To qualify for a premium credit, you’ll have to mail a notice of your dissatisfaction to the Allstate within 180 days of the accident that prompted you to file a claim in the first place. And under the guarantee, you can receive only one credit for each covered loss and only one credit per vehicle.

Bad behavior or good business?

Michigan insurance attorney Steven Gursten writes on his blog that the limitations on the premium credit “do little to motivate Allstate to improve its claims-handling process. Instead, it provides Allstate immunity for future bad behavior after a claimant has successfully complained.”

As for the 180-day window, Gursten complains that a bad claims experience may not surface until after that window closes.

Gursten says that overall, the claim guarantee “does not seem like a huge change in (Allstate’s) standard operating procedure of putting profits over people.”

Allstate explains the rules about the Claim Satisfaction Guarantee on its website.

“When you buy insurance you are, in essence, buying a promise,” Allstate says. “With the Claim Satisfaction Guarantee, we are providing our customers with the confidence that we will deliver on this promise. No other insurance company is standing behind its service like Allstate.”