Learning Your Car Insurance Company’s Rating

There are three types of car insurance ratings worth checking: (1) financial ratings, (2) consumer advocate ratings, and (3) customer reviews. Compare rates online to save up to 20%.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 27, 2021

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Here's what you need to know...

  • There are three types of ratings to review
  • The most reliable of the three is the financial rating
  • Keep in mind that customer reviews tend to be negative; they should still be taken into consideration, but remember to take them with a grain of salt

When it comes to choosing car insurance, you want to make sure you go with a company that will give you the best coverage, service, and price.

That means you’ll want to check insurance company ratings as part of the quote collecting process. But just exactly what are you looking for with insurance company ratings? And how do you find those ratings? We’ll answer these questions in the course of this article.

Enter your ZIP code in the FREE search tool above to compare car insurance rates from providers all across the country.

There are three types of ratings you’re looking for when investigating car insurance companies. They are:

  1. Financial ratings
  2. Consumer advocate ratings
  3. Customer review ratings

All three types of ratings give you a good overall picture of how an insurance company is doing.

It’s unlikely that you’ll find one single company that always scores well in all three ratings categories from year to year.

You can find companies with high ratings that are fairly consistent, though. Those are the types of companies you want to look at in more depth.

What are financial ratings?

Financial ratings are measurements of an insurance company’s financial stability. They give a rating for present stability and anticipated stability.

There are several internationally known companies that are experts in this field and provide these ratings, such as:

Generally they will provide at least two ratings, sometimes four. The first of these two is known as “financial strength.” This rating measures an insurance company’s ability to pay anticipated claims for the current year as well as its other debt obligations.

It’s the more important of the two. You should concentrate on companies getting an “A” or better here.

The second rating is for something known as “future outlook.”

Future outlook is a bit more difficult to forecast because it entails trying to determine future financial markets as a whole.

Nonetheless, this rating is more of an indication of how well an insurance company manages its investments in proportion to its liabilities.  A company with a “stable” rating in this area is believed to be poised for a good future.

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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What are consumer advocate ratings?

Consumer advocate ratings are provided by independent agencies who study products and services to see how well customers are treated. J.D. Power and Consumer Reports are but two examples of organizations that provide such ratings.

In fact, you may have seen some of the Consumer Reports special editions on car insurance. They are pretty well-known in the industry as being accurate in their ratings.

Depending on the entity providing the rating, grades can be given numerically or alphabetically. What these entities are looking for is:

  • Overall customer satisfaction
  • Timeliness in making claims
  • Any pending litigation
  • Overall business practices

Just as with financial ratings, it’s difficult to find an insurance company that scores high in consumer advocate ratings year after year, but getting consistently good ratings over the course of five or six years is a good indication that an insurance company can be trusted.

Are customer review ratings dependable?

The last rating you’re looking for comes by way of customer reviews. There are a plethora of independent websites compiling customer reviews and offering ratings accordingly. Usually you’ll see them represented as a number of stars.

Of all three types of ratings, the customer reviews might be the most accurate in terms of everyday interaction between customer and insurance company. However, you must remember to take some customer reviews with a grain of salt.

It is a fact that survey sites tend to lean towards negative reviews by customers regardless of how good a product or service is. That’s because happy customers generally have no motivation to sit down and write a favorable review and post it to a website.

It is the unhappy customer, wishing to get retribution, who will take the time to do so. Don’t be spooked if you see a company you otherwise would have trusted that has more negative than positive reviews on the Internet.

Also, be aware that insurance company customers rarely see insurance as a business. Most who write negative reviews will give no quarter to insurance companies with the understanding that they need to make a profit in order to stay in business.

This lack of understanding usually only adds fuel to the fire for an unhappy customer who believes an insurance company is trying to rip him off.

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