Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 22, 2020

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It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Things to Remember...

  • Remember that the cheapest auto insurance policy is not always the best policy
  • Research an insurance company’s financial ratings as well as customer satisfaction
  • Know exactly how much coverage you need when you are looking for an insurance policy

When you are buying auto insurance, one of the things that many consumers look at is trying to find the cheapest affordable policy possible.

However, cost should not be the only factor you consider when buying car insurance. 

Although it can be tempting to only buy insurance you find for the lowest price possible, cheapest does not always equal best.

In fact, in some cases, the cheapest auto insurance company may cost you more money in the long run if you end up in an accident and need to file a claim.

Enter your ZIP code into our FREE car insurance comparison tool to find the best rates possible on reliable auto insurance plans!

The Importance of Researching Insurance Companies

The insurance company is built on the idea of providing financial protection for you if you have an accident.

However, even the most highly preferred auto insurance company is also in business to make a profit.

As a result, they take a gamble that you will not actually need to use their services and they will make money from you because of premiums you pay.

They take the premium money and invest it, using profits from those investments to build up financial reserves and increase the value of the company.

Unfortunately, if you need to file a claim and the insurance company has low levels of financial reserves in place, you may have problems getting that claim approved or paid. Also,

Also, if you have chosen one of the worst rated auto insurance companies, you may discover that filing a claim results in your premium rates rising dramatically, since you have proven to be a risk for them by filing a claim.

When you are buying insurance, you want to choose a company that will pay claims quickly and easily.

You should look for a company with strong financial stability and a good track record of customer service.

Finding out these things about prospective car insurance companies requires you to do a little bit more research than only looking at premium rates.

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Financial Stability

Financial stability and health are extremely important when choosing an auto insurance company.

You can research the financial health and stability of insurance companies by looking at reports online.

There are several independent financial organizations that monitor and evaluate insurance companies and other financial institutions and make their reports available online.

Three of the best-known monitoring organizations are Standard and Poor’s, Fitch and AM Best.

Consumer complaints can also be an indication of potential problems with an auto insurance company.

Generally, consumers file complaints when they are having problems getting claims approved or paid from an insurance company. Consumers may also file complaints if premium rates increase dramatically or unexpectedly.

Each state has a Department of Consumer Affairs that regulates and monitors the activities of insurance companies, brokers, and agents in their state.

You can find out about consumer complaints and lawsuits by visiting your state’s Department of Consumer Affairs website.

This department is charged by law with investigating any and all consumer complaints and taking any disciplinary or legal action necessary if they find wrongdoing.

Consumer Satisfaction

Another important area to research is how consumers feel about a potential auto insurance company.

Consumer satisfaction surveys can provide you with information regarding customer service, how well claims are processed, and how happy customers are with their car insurance company.

JD Powers publishes an annual report of their consumer survey on auto insurance company. You can find the results of this survey on their website.

If you are in the process of buying car insurance, it is important to compare several companies before making a purchasing decision.

Before buying auto insurance, find out about the financial health and potential consumer problems before making a decision.

In the long run, it may save you more money than buying the cheapest car insurance you can find.

Our FREE auto insurance comparison tool is available now to help you find the best policy!