How to Choose a Reputable Auto Insurance Company

Perhaps worse than shopping for a car and dealing with car salesmen, is the task of shopping for insurance.  How do you know what companies are reputable and which are just out to take your money and provide little in return?  Before you shop, the first question to ask yourself is what is it you want from your auto insurance company.  Mainly, you want them to:

•    Be honest with you – tell you what coverages you need given your circumstances and how much it will cost
•    Be responsive to your questions – have someone available to answer your coverage and claim questions
•    Have a history of good service
•    Be fair – handle your claims in a fair and timely fashion
•    Have a strong financial outlook
•    Have few complaints filed against them
•    Be rated highly by private rating services

You can certainly ask your friends and family members for their personal recommendations.  After all, your cousin Joe had a good experience with ABC Company when he made a claim following his motorcycle accident, and your Aunt Sophie raves about her insurance broker for XYZ.  But beyond individual references, if you want factual information about insurance companies to find out how they are rated in the industry, and whether or not there have been complaints filed against them and what type, your best source of information is none other than where you are reading this article right now—the Internet.

First, start with the website for your state’s Department of Insurance.  (It may go by a different name, such as Insurance Division, for example, so just Google state insurance department.)  The sites are packed with free insurance information for consumers.  All complaints against insurers that do business in your state must go through this state department, and you can usually conduct a search to find out how many complaints were made, see the reasons for the complaints and how they were handled.  You can find out if a company you are considering going with is licensed to sell insurance in your state, how long they’ve been licensed and how many complaints they have received in recent years. 

Note, that if you buy from an unlicensed insurance provider, your department of insurance may have little or no regulatory authority to assist you if you have a problem later on.  And if they go bankrupt, you will have no protection from your state, most of which have certain consumer guarantees in place.

As for rating the financial condition of an insurance company, there is a free tool online called the Consumer Information Source from The National Association of Insurance Commissioners (NAIC).  It lets you look up complaints and licensing, as well as financial information for specific companies by state as long as they are in their database.  If a company is not in their database, it is probably not a licensed insurer.

There are also several private online rating services that can help you make a decision about which insurer is best suited for you based on financial analyses and other criteria.  While they carry no guarantees, their opinions can be valuable because they are opinions from a private analyst’s unbiased perspective.  Ratings can be obtained by phone, mail or Internet, but in order to make sense of these ratings for any given insurance company, a good practice is to always get an explanation of the rating criteria so you know how it applies. Another good habit is to get ratings from prior years so it can be compared to the most current information.

Here is a list of some free rating services that provide rating information for insurance companies:

• The A.M. Best Company provides unlimited access to browse its own Best's Rating Center after signing up for a free online account. You’ll have access to detailed insurance scores and company information, including license and financial info for insurers worldwide. Many local libraries subscribe to Best’s Insurance Reports if you’d like to get a hard copy without having to print it out yourself.
• Fitch Ratings has an alphabetical listing of over 2,700 insurance companies that it can provide ratings for on its website. The e-mail of the analyst(s) is provided on each rating along with the companiy's NAIC identification number.
• Moody's Investor Service gives unlimited ratings of insurance companies and other financial institutions to registered users via its online service. A free account is required.
• Standard & Poors has its “RatingsDirect” service, which taps into credit (financial) ratings and research on companies in nearly 100 countries. The site is not as user-friendly as the others, but you can sign up for a free account to view insurers’ credit ratings and company profiles.

You may also visit any of these sites to get a phone number with which you can call to speak to a person and get free ratings over the phone. 

Just remember to do your homework first so you feel comfortable and confident that you have gotten all of the information that is available.  Then your decision will be an educated one, and whichever company you decide to go with, you will feel good about your choice.