5 Reasons People Dislike Insurance Companies

Published Date: 10/18/2025

Five Reasons People Dislike Insurance Companies — and What Needs to Change

Let’s be honest — few people have warm feelings about their insurance company.

Whether it’s homeowners, auto, health, or life coverage, many consumers view insurance as a necessary evil: something you have to buy, rarely use, and never quite understand.

In a lighthearted but telling segment titled “5 Reasons People Dislike Insurance Companies,” insurance expert Karl Susman broke down the root causes of this widespread frustration. Each point reflects a deeper truth about how the insurance system works — and what can be done to make it better.

Here’s a closer look at those five reasons — and the policy and industry insights behind them.

1. It’s Mandatory — Not a Choice

“Reason one,” Susman explained, “it’s mandatory to carry insurance.”

And that’s absolutely right.

Whether it’s auto insurance required by law, homeowners insurance required by your mortgage, or even health insurance required to avoid catastrophic costs, most people don’t choose insurance — they’re obligated to have it.

From a consumer’s perspective, that makes insurance feel like a tax — something imposed from above, not voluntarily purchased.

But from a risk management standpoint, mandatory coverage protects everyone:

• Auto liability insurance ensures that if someone causes an accident, victims can recover costs.
• Homeowners insurance ensures lenders aren’t exposed to total loss from fire or natural disaster.
• Health insurance helps prevent unpaid hospital bills from burdening the public system.

The policy insight: Mandatory insurance isn’t about control — it’s about risk pooling. When everyone participates, costs are shared across a large group, keeping the system solvent.

Still, the industry often fails to communicate that bigger picture. For most consumers, the experience feels less like protection and more like compliance — a dynamic that immediately sets a negative tone.

2. You Pay and Get Nothing Tangible in Return

“Reason number two,” Susman said, “you pay money and you don’t get anything tangible in return.”

This is the biggest emotional barrier between consumers and the insurance industry.

You can see your car, your house, your phone — but your insurance? It’s invisible until something goes wrong.

For years, insurers have described coverage as peace of mind. While true, that’s an abstract benefit in a world where people expect immediate value for their money.

In behavioral economics, this is called the “asymmetry of exchange.” You pay now for a service you may never use — and if you’re lucky, you’ll never have to.

That disconnect makes insurance feel like a bad deal. You’re spending hundreds or thousands of dollars annually for something intangible, often without understanding how that money protects you from financial catastrophe.

The policy insight: The industry needs to redefine value. Instead of focusing on what consumers might get someday, insurers should emphasize what they’re already getting today: protection, stability, and access to resources in emergencies.

For instance, many modern insurers now provide:

• Risk mitigation tools (like smart sensors, wildfire alerts, or weather apps).
• Preventive benefits (discounts for maintenance or home upgrades).
• Financial guarantees that would otherwise be unavailable to individuals.

If insurers framed coverage as a financial safety net you build, not a fee you owe, consumer sentiment could begin to shift.

3. Bad Stories Spread Faster Than Good Ones

“Reason three,” said Susman, “you’ve heard some really bad stories about insurance companies.”

And indeed, horror stories about denied claims, endless paperwork, or surprise cancellations travel far faster than stories of successful claims.

That’s because negative experiences are both emotional and shareable. A single viral post about a denied wildfire claim can overshadow thousands of smooth transactions that go unnoticed.

But some of this frustration stems from the complexity of policy language and claims procedures. Most consumers don’t fully understand what their policies cover — or what they don’t. When disaster strikes, that lack of clarity breeds resentment.

For example:

• Homeowners may not realize their policy excludes flood damage.
• Drivers might assume “full coverage” means every accident is covered.
• Renters may think personal belongings are automatically insured under a landlord’s policy (they’re not).

The policy insight: The insurance industry has a communication problem, not just a coverage problem.

Modernizing policy language, streamlining claims processes, and making coverage explanations accessible — not legalistic — could prevent many of these public relations disasters before they begin.

Transparency, not marketing, will restore trust.

4. Claims Take Too Long — and Feel Unfair

Though not explicitly listed in the brief transcript, one of the most common complaints in surveys and regulatory reports is how claims are handled.

Many consumers feel that the moment they need their insurance the most is the moment they have to fight for it.

In California and other states hit by disasters, homeowners have waited months — sometimes years — for claims to resolve. Meanwhile, they’re left covering temporary housing or rebuilding costs out of pocket.

This is not always the insurer’s fault. Large-scale events like wildfires or hurricanes strain resources and flood the system. Still, from the consumer’s perspective, delays feel like betrayal.

The policy insight: Regulators are responding.

California, for example, has implemented new claims-handling timelines that require insurers to acknowledge, investigate, and pay claims faster after declared disasters.

Some companies are also investing in AI-assisted claim verification to speed up inspections and payouts.

The more responsive the system becomes, the more trust it can rebuild — but the cultural change must match the technological one.

5. It’s Hard to See the Human Side of Insurance

Ultimately, the fifth and most fundamental reason people dislike insurance companies is simple: they don’t see the people behind the brand.

When consumers interact with insurers, it’s often through automated systems, call centers, or dense paperwork. The experience feels impersonal — bureaucratic at best, adversarial at worst.

“Most people only hear from their insurer twice,” Susman often notes elsewhere: “when they buy the policy and when they file a claim.”

That’s not enough interaction to build trust or loyalty.

The policy insight: Human connection still matters.

The insurance industry is built on promises — and promises are made between people, not algorithms. Insurers that invest in agent relationships, personalized outreach, and empathy-driven service are more likely to retain customers and avoid public backlash.

In fact, independent agents and brokers — who sit between carriers and consumers — are often the bridge that rebuilds that trust. They translate policy language, advocate for clients during claims, and humanize what would otherwise be a transactional experience.

6. Turning Dislike into Understanding

Insurance will probably never be loved the way people love new gadgets or travel experiences. But it doesn’t need to be loved — it needs to be trusted.

Every frustration consumers have with insurance has a root cause: lack of transparency, lack of communication, and lack of visible value. Addressing those issues requires a shift from policy-driven to people-driven service.

As Karl Susman’s list reminds us, dislike doesn’t stem from greed or malice — it stems from misunderstanding and misalignment.

The good news? Those are fixable.

When insurance companies commit to clearer communication, fairer claims, and genuine engagement, the narrative can change. Consumers may never cheer when paying their premiums — but they might finally understand why it matters.