7 tips for choosing the right car insurance company

Emmet Pierce

When it's time to select a car insurance company, a little detective work will help you choose one that will meet your needs as a consumer.

choosing car insurance companyIf you tap into the wealth of information that's available on the Internet and seek personal referrals from friends and family members, you should be able to find the auto insurance company that's right for you, says Michael Barry, a spokesman for the nonprofit Insurance Information Institute.

The trick, he adds, is not to be too eager to make a decision. Take time to compare what different insurers have to offer. 

"Shop around," Barry says. "You have access to more information about auto insurance than ever before."

Here are seven tips for choosing an auto insurance company.

1. Consult J.D. Power and Associates' consumer satisfaction ratings.

Derek Ross, an independent insurance agent based in Tarzana, Calif., says J.D. Power -- a global marketing information services company -- collects and evaluates data from insurance policyholders. It rates insurance companies on such factors as policy costs, policy options and how easily insurance claims are processed. This data can help you see how insurers stack up against each other when it comes to customer service.

2. Talk to personal injury attorneys.

Personal injury attorneys can be great sources of information about the performance of insurance companies, says Kevin Foley, an independent insurance agent based in Milltown, N.J. By chatting with lawyers who handle such cases, you can get a sense of which insurers are reluctant to pay claims following auto accidents, he adds.

"The lawyers know," Foley says. "They know which companies pay off. They know which insurance companies are fair and which ones are overly aggressive. There are some that fight every claim. Others recognize that clients make mistakes. That is why you have insurance."

3. Visit state regulatory websites.

There's useful information available online from your state department of insurance, says Pete Moraga, spokesman for the Insurance Information Network of California. Many state insurance regulators publish consumer complaint ratios. Typically, the ratio will tell you how many complaints a company has received for each 1,000 claims filed.

Don't forget to check out your state attorney general's website. Such websites often publicize regulatory actions. For example, Massachusetts Attorney General Martha Coakley announced in April 2013 that an auto insurance company had agreed to pay more than $200,000 to settle allegations of overcharging hundreds of consumers for insurance premiums.

4. Visit websites created by disgruntled policyholders.

Disgruntled auto insurance policyholders sometime create websites to vent their rage at companies and commiserate with other angry consumers. These websites often lack objectivity, so don't assume that everything you read is true. However, if you notice a pattern of complaints against a particular company, you may want to investigate further.

Foley says all insurance companies, no matter how responsive to consumers, receive complaints. "You can't keep 100 percent of the people happy."

5. Check out the financial health of auto insurers.

Online insurance company ratings from A.M. Best and Standard & Poor's can help you measure the financial strength of various insurers. The purpose of these ratings is to determine whether insurers will still be in business when it's time for you to file a policy claim. Each service uses its own criteria to evaluate the companies. The goal is to give consumers an understanding of how  companies meet their financial obligations. 

6. Make sure you're getting your money's worth.

Despite the many TV commercials in which car insurance companies promise to beat the competition's price, it's a mistake to assume the best insurer always is the cheapest one, Ross says. When you compare car insurance policies, make sure that the ones that cost less offer adequate levels of coverage.

For example, cheaper policies may offer only the minimum level of auto liability coverage required by your state. All states (except for New Hampshire) require drivers to have liability protection. It pays for damage you may cause to other people and their property.

A low-cost policy may lack collision coverage, which pays to repair your own car following an accident. It may also lack comprehensive coverage, which pays for damage to your car caused by factors other than accidents, such as theft, vandalism and natural disasters.

7. Call an auto body shop.

Foley says making a call to an auto body shop that you know and trust can help you determine which car insurance companies are most willing to pay for legitimate damage claims. Because they are in the repair business, these shops work closely with the insurance industry and know how companies function.

Whenever he visits a body shop, Foley says he asks about car insurance companies.

"I want to know if an insurance company is easy to work with," he says. The body shops "have a sense of who is fair."

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