How Can I Tell If My Insurance Company Is Good?
Fortunately for the consumer there are five major rating services that rate all insurance companies (AM Best, Fitch, Moody’s, Standard & Poor’s, and The Street.com)
While they all use the alphabet to rate the companies, an “A” rating with one of the services may not mean the same from another service. The chart on the next page shows the ratings assigned by Fitch as an example.
Until Hurricane Andrew hit south Florida in 1992, causing the largest insured losses of any single natural disaster up to that point, most of us lived in blissful ignorance about our insurance coverage.
Those days are long gone; thanks to some other unwelcome visitors named Katrina, Wilma, Rita, Charley, Jean, Frances, and Sandy. At any given time, somewhere in the U.S. we are threatened by snowstorms, mudslides, floods, tornadoes, and wildfires.
These disasters are not just capable of wiping out roads and homes. They can wipe out your insurance provider too.
In 2006, Poe Financial Group went under as a direct result of hurricanes Frances and Jean in Florida, and Vesta Insurance Group failed as a direct result of Hurricane Katrina.
Checking out a company is as easy as searching on the internet. Here is an easy way to check.
· Go to one or more of the rating company’s website
Put the name of the company you are looking for in the search bar and begin reading. You may have to pay a fee to get more detailed information on the company. The company you want to “keep” should have a B+ or higher rating.
· Look for complaints online
No company is perfect, but you do not want to see a pattern of complaints. People are more likely to share their complaints online than their satisfaction with a company. Go to your favorite online search engine and search for the company adding the words “scams” or “complaints” in your search to find specifics. Only one caveat applies here; it is a numbers game. A company that writes a tremendous number of policies will also have a larger number of complaints than a smaller one. That is why the important number is not how many—but the proportion or ratio.
· Trust your agent’s due diligence
If you are looking to work with a seasoned independent insurance professional who has a large base of clients and has been in the business for many years, chances are they have already done a lot of due diligence. If they represented a poor quality company, the word would get out and business would suffer. They would never consider a new or “untested” provider or recommend a “scam” company.
Door #1…Door #2…or…?
Making Your Choice
Up to this point, I have talked about
a. Buying from an agent vs. online.
b. Working with an independent vs. a captive agent.
c. Determining if the insurance company is good or not.
With that in mind, let’s talk particulars—onward!