How can I tell a good auto insurance company?

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Things to remember...
  • Financial stability is a primary area of concern when you are evaluating auto insurance companies
  • AM Best, Fitch and Standard and Poor’s are among the best known rating companies in the USA
  • Every state has a Department of Consumer Affairs which regulated the insurance industry

There are many different kinds of auto insurance and even if you know what kind of insurance you need to buy, it can be hard to sort through the thousands of companies offering this financial product.

In order to choose an auto insurance policy and provider that will provide you with excellent financial protection, you should evaluate several aspects of insurance company health.

Although the price is important, it is not the determining factor on whether or not an auto insurance company is actually good or not.

Our FREE car insurance tool will help you find good companies when you enter your zip code above!

Financial Stability

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Financial stability is a primary area of concern when you are evaluating auto insurance companies. Insurance companies are financial entities. They use your premiums to make investments from which they build their financial reserves.

Financial reserves are the monies that are set aside to pay for claims made by policy holders.

The top ranking auto insurance companies in financial health will have larger financial reserves and more ability they have to pay claims.

Financial stability and strength are important, particularly if a large number of claims are filed during as short period of time.

In April 2011, the southeastern United States was hit with multiple tornados, resulting in literally billions of dollars in damage to homes and vehicles.

The worst auto insurance companies that were in poor financial health had difficulty paying claims, denied claims, have been sued by customers and many have gone out of business. Avoid these bad auto insurance companies by checking ratings ahead of time.

There are several independent organizations that monitor and evaluate the financial strength of insurance companies and other financial institutions.

AM Best, Fitch, and Standard and Poor’s are among the best known and they publish their findings and grade rates on their websites.

Ratings are based on a letter grade system.

Grades are based on an evaluation of an insurance company’s financial reserves, financial policies and procedures, credit rate, and the number of years they have been offering insurance service products.

 

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Consumer Complaints

It is very common for people to be unhappy with their auto insurance company if their premiums increase or they have problems with claims.

However, when a consumer is upset enough to file a complaint about their insurance company, then it is usually about more than their premium rate increasing by a few dollars.

Typically, consumer complaints about insurance companies will increase after events that lead to large numbers of claims, such as the weather incidents in the southeast in 2011.

When you are investigating consumer complaints, be wary of companies with large numbers of complaints.

This is an indication that the insurance company frequently denies claims, has difficulty paying claims or engages in questionable business practices. The Better Business Bureau is a national nonprofit organization dedicated to providing consumer information.

Additionally, they assist consumers when they have problems with companies and mediate resolutions. They also investigate and evaluate companies doing business with the public. They publish information about consumer complaints and business reviews on their website.

They publish information about consumer complaints and business reviews on their website.

You can also find information about auto insurance companies and consumer complaints from the Department of Consumer Affairs.

Every state has a Department of Consumer Affairs which regulated the insurance industry. The Department of Consumer Affairs issues licenses for insurance companies to operate in their state.

They also issue licenses to insurance agents and brokers. If a complaint is filed with the Department of Consumer Affairs, they investigate the complaint and govern any actions that result.

Each state publishes information about consumer complaints and lawsuits filed against insurance companies on their websites.

Customer Satisfaction

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Customer satisfaction encompasses a whole realm of different aspects of customer interactions with an auto insurance company.

Most often, when customer satisfaction surveys and evaluations are conducted, they are considering how customers feel about customer service, claims processing and overall perceptions and impressions consumers have about their car insurance companies.

JD Powers and Associates performs an annual review and survey of auto insurance companies and consumer satisfaction.

The JD Powers review asks thousands of consumers around the United States about their experiences with their car insurance companies, including their overall satisfaction, customer service, claims processing and premium rates.

Consumer Reports also publishes findings from their evaluations of auto insurance companies on their website and in their subscription magazine.

The review includes auto insurance company performance in claims processing, customer service, premium rates, insurance products and services offered and policyholder benefits.

By looking at several different aspects of auto insurance company health, you should be able to narrow down your choices to companies which have high ratings in the areas you value the most and are important to you.

With this information in hand, you can find good car insurance companies and make a smart informed purchasing choice. Enter your zip code into our FREE auto insurance comparison tool below!

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