Five Reasons You Might Hate Your Insurance Company (and Why You Shouldn't)

Stories about insurance companies letting down their customers are easy to come by, but there's another side to many of those stories.

By Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS

published 24 January 2025

in Features

A couple look very unhappy with the woman helping them at a desk in an office.

(Image credit: Getty Images)

Insurance companies are not at the top of the list of the most-loved industries. Why? you may ask. Here are the five reasons people hate their insurance companies — plus a pinch of real-life information that may help them feel differently. You can also watch my video about this:

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Reason No. 1: It is mandatory to carry an insurance policy in many instances

If you own a home or own or lease a car, chances are you are told as part of your arrangement with your bank or financial institution that you are required to purchase an insurance policy to protect the asset. Nobody likes to be forced to do anything. Seriously, can you think of a single thing that you are glad you are forced to do? Like being forced to pay taxes? How about filling out forms, pretty much of any kind, ever? Or sitting on hold for hours to cancel a subscription you no longer want? The list goes on and on. It’s fine if we have the autonomy to decide on doing things, but being forced to do it, let alone if it is to spend money, yeah, no, thanks.

Keep one thing in mind: If it wasn’t for the insurance company, you would have only two options when it comes to buying that house or car. Option one would be to pay for it in full, upfront. Without a loan, you would not have to worry about being forced to purchase insurance to protect it. Although I can’t fathom why you wouldn’t want protection on something that is a pure asset. However, I digress. Option two would be not to make the purchase at all. Not great options. Maybe that insurance requirement isn’t so bad after all, if it is actually giving you more choices.

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Karl Susman

Karl is an insurance agency owner, insurance expert witness in state, federal and criminal courts, and radio talk show host. For more than 30 years, Karl has helped consumers understand the complex world of insurance. He provides actionable advice and distills complex insurance concepts into understandable options. He appears regularly in the media, offering commentary and analysis of insurance industry news, and advises lawmakers on legislation, programs and policies.

Reason No. 2: You pay money and don't get anything tangible in return

Go to the market and buy some groceries. You spend money and leave with — wait for it — food. When it comes to your insurance policy, you pay money and get … well, some paperwork with lots of words on it. More accurately, today you don’t even get that — you get a PDF file. If feels like you’re not getting anything since it isn’t something you can pick up, hold, use, consume, trade or sell. What are you really paying for?

My father used to have a saying. Yes, I’m going there. He used to say that the true cost of your insurance isn’t shown in your policy. In fact, the true value of your insurance isn’t known until you have a need for service or have a claim. That’s a famous quote from Marty Susman, my dad and mentor. And he was right! You may not see what or where your buckies are going when you pay your insurance premium, but you can bet your tushy that when a loss happens, you will be glad you have the full force and finances of a good insurance company to step in and help you.

Reason No. 3: You've heard some really bad stories about insurance companies

Nothing like a good ghost story to tell when you’re camping, and along the same lines, who hasn’t heard or shared a tale of an insurer who did them wrong? Pretty much everyone. I get it, things don’t always go as you expected, and it makes for great fodder to commiserate about who had a worse experience with the big bad insurance company. Misery loves company, right? Big fun!

Insurance companies and their representatives are people. I know some of us forget that, but it’s true. Some are terrific at their jobs, some are decent, and some truly aren’t great. No question about it. And let’s be honest, who is walking around dying to share a story about a great situation they had with their insurance company? Like, practically none. So remember that for each bad story you hear about an insurance interaction, there are literally millions of interactions that went well — they’re just not super fun to yap about.

Reason No. 4: You had a claim denied

Hey, you’re paying money for as long as you can remember, and when that time comes and a claim occurs, for some reason or another you don’t get all of the coverage or money you feel entitled to. This is one of the most common reasons that the industry gets a bad rap. No further explanation necessary — paid premium plus denied claim equals bad mojo.

Insurance policies are contracts. Legally binding contracts. We agree to pay the premium, and in return, the contract says under what circumstances the insurance company will pay if a loss occurs. Do you think it is possible that there are things that are not covered in the insurance policy contract? Unless you have a policy that says it will cover everything under all circumstances, then the answer is yes. There are bound to be times when a claim is not covered because the contract does not provide coverage for it. Read your policy, and you can avoid being surprised by a claim denial.

Reason No. 5: The concept of insurance is confusing

You’re going to pay $1,000 today, and if a loss occurs tomorrow, the insurer may pay out $1 million? How is that even possible? How can that happen? Similarly, how can you pay $1,000 every year for 20 years and then have the insurance company decline to pay you for a claim? Spoiler alert: See Reason No. 4 above.

The insurance industry is complex. If you understood it as well as I do, then you’d be an insurance expert. Most folks, obviously, are not insurance experts. Don’t feel bad if you don’t understand how your insurance policy or insurance company works, since it would be a great anomaly if you did. Instead, find an expert to work with you. There is no shortage of licensed insurance professionals in this country. Think I’m kidding? We’re looking at well over 1.2 million licensed insurance professionals — certainly enough for you to find one you like.

I bet if you do find one, you will not be as likely to be frustrated about insurance or your insurance policies.

Want to learn more about insurance? Visit KarlSusman.com.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Karl Susman is a veteran insurance agency principal, nationally engaged insurance expert witness and broadcast host who translates insurance from jargon to judgment. For more than three decades, he's helped consumers, courts and policymakers navigate coverage, claims and compliance. As Principal of Susman Insurance Agency, Karl works directly with households and businesses to compare options and make clear, defensible coverage decisions.