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How to Evaluate Car Insurance Companies

Getting insurance for your car is essential to your financial well-being. It’s not a matter of whether or not to get coverage but from whom to get it.

There are thousands of auto insurance offers available in the market. If you compare car insurance plans, it could get overwhelming. Many of these companies offer similar auto insurance products. They may vary in rates, coverage options, and discounts, though.

Try narrowing your choices to a few car insurance companies based on a set criterion. This will make the task less complicated. Below are some of the ways to evaluate the auto insurance providers you shortlisted. These steps would make it easier to compare their offerings and choose what best suits your needs.

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Financial Stability

You get coverage to avoid worrying about the financial impact of damages or injuries from a car breakdown or accident. Thus, financial stability is essential when choosing an auto insurance provider. 

Only choose a company that can fulfill its financial obligations to its clients. To do this, use the ranking system of AM Best. The credit rating agency specializes in the assessment of insurance companies’ creditworthiness. 

The Best’s Financial Strength Rating (FSR) is issued based on the ability of an insurer to pay claims from policyholders. The rating considers the qualitative and quantitative aspects of the company’s business profile. It also looks at the balance sheet strength and operating performance. 

Under the FSR, companies scoring A++ to B+ get a secure rating. Meanwhile, those with B to S scores have a vulnerable rating. The higher FSR an insurance company receives, the more financially stable it is.

The companies with at least an A+ rating are USAA, State Farm, Geico, Travelers, Nationwide, Allstate, and Progressive.

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Customer Satisfaction

Insurance involves a long-term relationship between a client and an insurer. Thus, customer satisfaction is an effective way to evaluate a car insurance provider.

Choose companies with high customer satisfaction ratings if you don’t want to deal with problematic insurers. Some providers only offer excellent service during the application process. However, they could be more difficult to contact once you have secured a policy.

J.D. Power’s auto insurance satisfaction score is a useful benchmark for evaluating insurance companies based on customer satisfaction. It focuses on the customer experience and considers several factors. These include interaction, policy offerings, price, the billing process, policy information, and claims.

If you want to emphasize the claims process, you may also look at the companies’ auto claims satisfaction scores from J.D. Power. In its 2021 study, J.D. gave The Hartford the highest overall customer satisfaction. Erie Insurance and Auto Club of Southern California Insurance Group were the runner-ups.

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Pricing

Pricing should also be one of the criteria to evaluate auto insurance companies. You won’t get a policy if its offerings are way beyond your budget regardless of its financial strength and great customer service. Keep in mind that prices will vary from one provider to another and depend on various factors.

According to Kelly Blue Book, various factors may affect prices. These include age and gender, credit score and driving record, marital status, zip code, and the car’s make and model.

When comparing prices from multiple companies, do not solely depend on the average annual premium estimates. Take into account the coverage levels and types from each plan as well.

In its February 2022 car insurance analysis, ValuePenguin named Statefarm, Geico, and USAA, as the three major car insurance companies offering the most affordable rates.

For a 30-year-old driver, the cheapest annual rate you can get among the 13 biggest auto insurers in the country is $432. The most expensive is $1,035.

ValuePenguin discovered that young drivers with accident histories are likely to get a higher rate than older drivers with clean records. 

Getting a minimum coverage policy might give you some savings on premium payments. 

However, it will also risk not getting full coverage if a major accident happens. 

Availability 

When writing down the companies for your auto insurance shortlist, don’t forget to consider the availability of those insurers in your location. Some companies have nationwide coverage. Others only operate in a few states. 

Consult their official websites to double-check if they’re available in your area. Don’t waste your time evaluating unavailable firms.

Accessibility

Another factor you might want to look at is accessibility. In the distant past, you only had your insurance agent to get information about your policy. If you rarely see the person, you might not receive updates at all.

Now, the widespread availability of the internet and mobile devices have given customers more access to information online. Policyholders can easily use websites and apps with the touch of their fingertips.

Nowadays, having the ability to access your auto insurance information via a mobile app is a must. Avoid instances where you need to dig through your compartment to look for your insurance papers when you get pulled over. You can make a few taps on your smartphone to access your auto insurance ID. If you need to file a claim, you may easily submit it electronically. 

Your criteria should also include the convenience of accessing and managing your car insurance policy online. Forbes reviewed the available car insurance mobile apps and came up with a list of the best apps based on their features. Allstate, Geico, American Family, Nationwide, and Progressive have the highest mobile app ratings.

Final Thoughts

Once you have a shortlist of possible car insurance providers, look for individual review articles online from third-party sources. 

Reading reviews from past customers, experts, and trade groups will give you a more in-depth understanding of what each company can offer.

A car insurance policy is a long-term commitment. Do your research and weigh your options before deciding.

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