Should auto insurance ratings be the final word?

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Things to Remember...
  • Although ratings are a great place to start when shopping for auto insurance, they do not provide the consumer with the whole picture. They are designed to be generalized
  • Before purchasing insurance, you should consider the quality in which a provider handles claims interactions with their clients.Even though a company might have a great rating from every source you have researched, they might be incredibly expensive in your city
  • Every state has different minimum liability coverage, but the minimum coverage may not be the best option for your situation
  • Remember, ratings do not consider agents and the hard work that they do. If you have a family member or friend that has mentioned having a great insurance agent, consider contacting them
  • One last area that every consumer of auto insurance should look for information is at local body shops. These companies deal directly with insurance companies on a regular basis. They can be a great resource in finding the best insurance company out there.

Although shopping for car insurance can be boring, it can also save you a lot of money. Researching and comparison shopping is highly recommended for anyone looking for new car insurance. Many consumers look to independent auto insurance ratings for providers, but you should not stop there.

Companies like A.M. Best and JD Power and Associates all provide quality ratings for consumers. They are incredibly valuable when shopping for insurance, but there are other factors to consider outside of ratings.

Things like state departments of insurance can also provide great information regarding insurance providers. In addition, other factors like discounts provided by companies and minimum liability insurance based on where you live are also important.

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Auto Insurance Ratings

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Although ratings are a great place to start when shopping for auto insurance, they do not provide the consumer with the whole picture. They are designed to be generalized.

A.M. Best, for example, only provides ratings regarding financial strength. If you purchase insurance from any company, your first concern should be whether that company can pay claims. A.M. Best’s ratings are a good barometer for finding companies that can pay claims reliably.

Another company that provides quality ratings is J.D. Power and Associates. Unlike A.M. Best, J.D. Power and Associates provide ratings based on consumer reviews of companies. They rank companies using a 5-point scale, and they provide a wide range of insurance providers.

In addition to whether a company can handle claims, you should also consider how a company interacts with their clientele. If a company receives consistently poor consumer reviews, you may want to look elsewhere.

Finally, local state departments of insurance also provide ratings for insurance providers. Most departments will issue reports that detail each insurance provider’s consumer complaint ratio.

Basically, a complaint ratio is how many complaints occur within a given number of claims. The higher the ratio, the worse the score is.

Before purchasing insurance, you should consider the quality in which a provider handles claims interactions with their clients.

If a company has a high consumer complaint ratio, you may not want to purchase a policy from them.

The Insurance Consumer Advocate Network (I-CAN) provides a wealth of information that can make a consumer’s purchasing experience far easier. I-CAN also provides a comprehensive list of every state’s department of insurance.

Other State Considerations

In addition to consumer complaint ratios, every state will also require different minimum liability insurance for each driver. Check with your state department website to find out what your state requires.

This also impacts which company to purchase insurance from because policies and premiums are dictated by the amount of insurance you purchase.

Also, insurance companies and their ratings will vary significantly from state to state, especially the bigger companies. Just because you recognize the name and have heard good things about the company does not mean that provider has a solid reputation in your state.

That’s where consumer complaint ratios play the biggest part. Make sure to only check with your state. If your state department of insurance does not provide ratios, compare a collection of ratios from multiple states. A consistently low rating can mean an insurer is a poor choice.

Obtaining auto insurance is a requirement in every state. Without it, you are breaking the law. Because of this, almost every state department of insurance provides fantastic information about buying auto insurance. Use your state department for state-specific questions.

Additionally, if you are having any issues with your current company, most state departments want you to report those issues to them. They may even have tools and resources to help you settle the issue with your provider.

Shopping Around

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Outside of ratings, you need to also consider shopping around for a policy. As stated above, where you live will drastically impact your insurance price.

Even though a company might have a great rating from every source you have researched, they might be incredibly expensive in your city.

Certain companies have higher rates according to location. For example, large metropolitan areas typically have very high insurance prices. You may want to shop around if you happen to live in an urban setting.

In contrast, you may live in a rural setting. This will also affect premiums. If you live in an area with lots of dangerous roads or other hazards, you could find yourself paying for pricey insurance.

Every state and city will garner different pricing, so shopping around is a must. Ratings are helpful, but doing your research in other areas is also important.

After considering where you live, start comparing prices with a bunch of different providers. There are a number of sites that provide instant quotes. Simply start making a comprehensive list of prices, companies, and policies before making a decision.

Also, always remember to consider ratings and state department of insurance statements in addition to prices. Finding a cheap policy from a crummy company is no good!

Consider the Type of Insurance You Need

Every state has different minimum liability coverage, but the minimum coverage may not be the best option for your situation. After researching ratings for providers you need to find out the exact type of coverage you need.

If you happen to own a car that has a high value on the road, you will probably want to purchase collision and comprehensive coverage.

Collision coverage will handle repairs because of an accident. Comprehensive coverage handles repairs caused by natural forces, like hail or wind.

You may also want to purchase higher liability coverage than the state minimum. If you have a collection of assets in your name, you may want to purchase liability coverage accordingly.

The worst scenario would be purchasing the minimum liability coverage and causing an accident. You may not have enough coverage to handle the claims from the other person, which would result in a lawyer seeking restitution from your other assets.

You need to evaluate your entire situation, the vehicle you want to insure, and your personal economy before every considering an insurance provider.

Finally, you need to evaluate what kind of driver you are. If you know you happen to drive dangerously or have a history of accidents, you may want to purchase collision coverage but not comprehensive. Being honest with yourself can also save you money in the long run in the event of an accident.

Being honest with yourself can also save you money in the long run in the event of an accident.

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What about an insurance agent?

Even though many of the larger companies have poor ratings, some agents who work directly with one company are quite good. Consider shopping around for either an agent who works directly with a company, which is called a captive agent, or seeking the help of an independent agent.

An independent agent works with multiple insurance companies. They tend to provide great service and are very knowledgeable. Even though you may want to avoid those larger companies with poor consumer ratings, having an agent as your middleman could be worth the purchase.

Remember, ratings do not consider agents and the hard work that they do. If you have a family member or friend that has mentioned having a great insurance agent, consider contacting them. A great agent with a big company can be a fantastic situation.

Use Consumer Reports and Comments

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One of the greatest ways to get a feel for an insurance provider is to talk with people. The Internet can be a great resource for dialogue between consumers. There are many forums and websites dedicated to holding conversations between people so that consumers can find the best company.

At its core, auto insurance is a service industry. Every provider wants your business, but not every provider offers the best service.

J.D. Power and Associates does provide a solid rating based on consumer reviews, but you might want to consider looking in other areas.

There are also many companies that provide information and opinions about insurance providers. Many of these companies base their opinions and research on consumer data.

One such company is Consumer Reports. With articles and lists ranking various insurance providers, as well as general information, Consumer Reports can also be a great resource in finding the right company for you.

Body Shops and Insurance Providers

One last area that every consumer of auto insurance should look for information is at local body shops. These companies deal directly with insurance companies on a regular basis. They can be a great resource in finding the best insurance company out there.

They are very familiar with the providers that cause problems for their clients. Talk to your local body shop manager to find out their opinions on providers.

Additionally, you can also ask local body shop managers about a current hot topic. Many insurance companies will push clients to use aftermarket parts in repair claims. Any body shop employee would tell you aftermarket parts are inferior compared to original equipment manufacturer parts.

Many body shops can tell you about insurance companies that push aftermarket parts. If you file a repair claim, you definitely want to make sure the insurance company if going to repair your vehicle with the best parts available.

Buying car insurance can be a hassle. If you do your research in multiple areas, including provider ratings, you can guarantee a policy that you can both afford and covers you in the case on an incident.

For further information about the basics of buying auto insurance, the Insurance Information Institute can be a very helpful resource.

Ratings and reviews, along with diligent research, is a necessary step in purchasing quality insurance.

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