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What Are Auto Insurance Ratings?

Ratings are scores given by independent evaluators and surveyors to insurance companies. We are to distinguish between two main rating types – those that reflect financial strength and ability to meet contractual terms and those that show how the company is viewed by its customers.

Financial strength ratings

Independent evaluators like A.M. Best or Standard & Poor’s assess each insurance company’s financial standings and publish their findings in mainstream media. Such information is useful to both investors (as financing a flourishing activity will bring them some profits) and consumers (as they know their money is safe with that company).

Should an insurance company run into financial trouble and threaten to close its activity, these guys will be the first to know and, most likely, predict it well ahead.

Consumer reviews

Companies like J.D. Power survey batches of customers and publish their opinions on how a certain insurer meets (or doesn’t/didn’t meet) their expectations. Consumers have to rate factors like:

  • Billing process: do the bills arrive on time? Are they clear enough for everybody to understand the charges? Do they reflect the offered services properly? Are there any hidden fees?
  • Policy offerings: How varied is the insurer’s range of coverage options? Does it suffice or is there room for improvement?
  • Support: How easy is it to contact the insurer? How easy is it to file a claim? Do they have local agents, toll-free phone numbers, non-stop support department or an online interface?

When evaluating an insurer it’s important to take both financial and consumer ratings into account, as they show two different sides of the same business.

In short, a company may have excellent financial standing but a sloppy customer service, or a top-notch support department but have already filed for bankruptcy.

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