What's a Good Auto Insurance Company Rating?

Letter grades
An important step in purchasing an auto insurance policy is to make sure that the coverage is coming from a provider that can be counted on. Those who are familiar with a certain carrier may feel safe in dealing with them, but in states with dozens of insurers—many of them smaller companies—it may be worth looking into a company's stability before buying coverage from them. Generally, an insurer will display a grade on advertisements and websites that are similar to grade-school marks such as A+ or B-. Grades such as an A- or above are typically assigned to the most financially sound companies, while anything below may show vulnerability. Other agencies have ratings like AAA or BBB, the meaning of which can be found on the agency's website.

Many have probably never paid attention or noticed these grades and often don't know what they signify. Grades are developed by rating agencies that take an in-depth look at a car insurance company's finances and assign a grade based on the insurer's financial strength. Rating agencies will analyze an insurer's creditworthiness, performance and financial condition, and investments. The better the grade, the more likely a carrier will have the ability to meet ongoing obligations to policyholders. 

Once the research has been completed, the agency will issue a grade to the carrier based on the findings. These ratings are offered by numerous companies and can usually be obtained free of charge online or by mail. The grading scales used by individual agencies are likely to be different, and car owners may want to understand what each grade indicates. For example, although a C may be considered average and good enough to pass in school, one agency equates this rating to "weak" from a financial standpoint, and a B is considered vulnerable. Many motorists may think that a B is satisfactory, but there are likely to be companies that are financially superior.

By obtaining this information from rating agencies, motorists have a better chance of finding the best rated car insurance companies, which tend to score grades of A or above. But these ratings are not the only characteristics that should sway a consumer's decision on whom to purchase auto coverage from.

Price is an important issue to most drivers, and although a company may be financially solid, it may not be worth paying an unnecessarily high amount for an auto policy. Car owners who shop around are likely to find a stable carrier that can offer a low rate.
A+ letter grade
Consumers may also want to look into reviews from an insurer's policyholders to gauge the level of customer satisfaction. Although these are not concrete, objective measurements, and although every carrier is likely to have a few disgruntled customers, these reviews can indicate how well providers interact with motorists, and steering clear of one that seems to have a trend of unsatisfactory service may save headaches down the road.