How To Find Your Car Insurance Company's Financial Strength Rating

Prompt response, friendly service and low car insurance premiums are all factors in choosing your car insurance company. But how big of a role should your insurance company’s financial strength play in this decision?

Many people overlook the financial strength rating as a minor detail. But your insurance provider’s strength has everything to do with you. It has the power to give you peace of mind. After all, who’ll pay your claims? Knowing that the insurance company will be able to meet its obligations when you make a claim and that it will be around for the long haul are facts that will make a direct difference in your life. So the question becomes: how do you find out your insurer’s financial strength?

Actually, it’s fairly simple. Every company has a rating. This rating helps you find which car insurance companies have the best — and worse — track records in the industry. The system is easy to use, too. Graded with the same basic system used in grammar school, you’ll find that A++ is known as the best and most reliable in its peer group. To achieve this rating, car insurance companies have to have impeccable records of both financial backing, cash reserves and an exemplary record for paying claims. The system also rewards insurance companies with a long track record. The ratings drop from the A++ category to A+, A, B++ and so on down to D, each signifying the relative security of the company to pay claims. There’s also another set of letters that are used: E, which means the company is under regulatory supervision; F, which means the company is currently in liquidation; and S, which means the rating has been suspended, suggesting either a buyout or a company that has gone out of business. You can go to most online car insurance sites to find these grades.

These strength ratings are not exclusively aimed at consumers. Investors also look at these ratings to help decide whether car insurance companies are viable as investments. Where will this company be in the next few years? The ratings can tell the consumer how the business world sees the company. Those opinions are broken into three more categories: positive, negative and stable. As the ratings suggest, a positive rating suggests strength. No matter where the letter rating is, the investment world sees the company as one headed the right direction, and that it may be due for a ratings increase. Conversely, a negative outlook means a bleaker future for investors and for the insurer – and possibly for you. A stable rating means just that: stability, with no predicted change in the near future.

So, now that you have the curriculum, which car insurance company makes the grade for you? Find out now and get a free car insurance quote online.

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