Using Ratings to Compare Insurance Companies

Jen Jones

Purchasing insurance is a pricey step to take when protecting your car, home, or even your life. Before making the plunge with an insurance company, you should always research the company either on the Internet or in listings in order to obtain insurance company ratings. This will allow you to find the best insurance company to protect you when a disaster strikes.

Understanding Insurance Company Ratings

Insurance company ratings include the company’s financial strength and financial instruments issued by the company. The financial strength measures the insurance company’s ability to pay claims, and the financial instruments include bonds and notes. Finding an insurance company with the best financial strength is important since you will have the comfort of knowing that they will pay your benefits when the time comes to file a claim. One way to find out about the financial strength of the insurance company is to take advantage of rating lookup systems available on the Internet. After entering the company’s name into the system, the results will provide you with the location of the company and the financial strength rating.

The financial strength of insurance companies is measured in a series of letters. Although each insurance rating service has a different scale of ratings, they generally use a similar scale of letters to rank the insurance companies. One of the top insurance ratings services, Standard and Poor’s, has a rating scale of As, Bs, Cs, R, and NR.

  • The As stand for the strongest financial strength: AAA (extremely strong), AA (very strong), and A (strong).
  • Ratings in the Bs represent the average financial strengths: BBB (good), BB (marginal), and B (weak).
  • The worst two ratings belong in the C category: CCC (very weak) and CC (extremely weak).
  • The last two financial strength ratings are R and NR, standing for regulatory action and not rated.

You should always try to work with an insurance company that has a rating of “good” or better. If you come across an insurance company that does not have an insurance rating, this does not necessarily mean that it is a weak company, but you should take precautions when working with them.

Homeowners Insurance Company Ratings

In the event of a disaster when your home gets damaged, the last thing you want is a difficult time filing a claim. In order not to get caught up in red tape, you should look at your homeowners insurance company’s ratings before agreeing to a policy. Aside from finding out the insurance company’s financial strengths, you will want to know the ratings of customer satisfaction scores from customers the company has helped in times of disasters.

Take advantage of resources on the Internet, in print and with your state insurance board. These resources track the homeowner’s insurance company’s ability to pay for losses and reports from policy holders. You want your policy to have good ratings and to be guaranteed. If your homeowner’s insurance company’s rating is weak, it may prove difficult to get your claim filed in the event you need to make a claim. You also run the risk of paying the bill yourself if the insurance company does not cooperate when it comes time to pay for your claim.

Along with financial status and customer reports, homeowner’s insurance company ratings often include their pricing and the ease of contacting them. Taking advantage of these ratings will give you a good idea of what working with each particular insurance company will be like, as well as providing you with information to make the best decision when selecting the right company.

Always be sure to find at least three insurance ratings for each insurance company you are considering. This will help you find the most reliable insurance company for you to trust and become a policyholder with. The last thing you want after a disaster is to be fighting tooth and nail for a filed claim to be paid, so shop smart before you become a policy holder with a specific company and check the insurance company’s ratings.

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