Are all auto insurance companies the same?

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Key takeaways...
  • Auto insurance carriers must be licensed to sell auto insurance policies because they are financial contracts
  • When you buy insurance, it’s very important to compare companies so you can ensure your claims will be paid
  • Some companies have bad reputations for paying out claims, so you should always pull up complaint index records
  • If you value customer service, it’s important to check a carrier’s customer satisfaction ranking
  • Profitability is important, so only do business with companies that have good, unbiased financial strength ratings

Saying all companies in a specific industry are the same would be a generalization. The auto insurance industry is a very competitive one where companies are vying for drivers’ business.

Since competition is mandatory, it’s impossible for all of the carriers in the marketplace to be the same.

They might all offer similar coverage options, but there are qualities that will set each provider apart.

When you’re looking for a company that you can trust, you need to know what qualities are important. You might not care if there’s a local office in your area, but like most consumers, you’re going to care if your insurer tries to deny your claims, which is why conducting research before you solicit quotes is wise.

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Only Buy Insurance From a Licensed Carrier
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Company licensing is very important. You might think that it’s not that big of a deal, but buying auto insurance from a company that has an active license that’s in good standing protects you as a consumer.

In most states, the Department of Motor Vehicles won’t even recognize insurance that’s purchased from an unlicensed carrier.

Licenses are issued by the state department of insurance. To keep their license, a carrier must comply with all of the rules set forth in the state.

Any carrier that’s guilty of violating the rules or consumer rights can be fined or penalized. Thus, the insurers have to answer to complaints, and they have to be more accountable when they are licensed.

How do you find out if a company is licensed?

It’s easy for consumers to find out if a company has its license or not. You don’t have to make a ton of phone calls just to get licensing information. Most of this information can be found online by visiting your state’s website.

Locate the Department of Insurance (DOI) page, and then you can do a search for the licensing status of the company you’re interested in.

Check Into the Company’s Complaint History
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Whenever a company is licensed, their complaint record is public knowledge, which is another huge advantage to doing business with a licensed company.

When a policyholder or a claimant isn’t happy with the way that a provider has handled an inquiry or a claim, they can file an official claim through the DOI. After the claim is filed, it can be seen in the carrier’s file.

Where do you find a carrier’s complaint information?

You can find a licensed company’s complaint information by accessing one of two sources. It’s best to start with the state’s page so that you can review the Automobile Complaint Composite Report.

Here, you’ll be able to see how many complaints were filed for each carrier and how many of them were deemed justified. There will also be a justified complaint ratio.

If the state doesn’t offer online access to the report, you can always visit the site for the National Association of Insurance Commissioners. Here, you’ll find a consumer portal that has a complaint report section with detailed information on each carrier in each state.

Some of the information that’s on the NAIC report includes:

  • Type of complaint
  • Reason for complaint
  • Complaint outcome
  • Total number of complaints
  • Response by insurer
  • How many complaints were justified

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Check the Insurance Company’s Financial Strength Record

Financial strength is very important in the insurance industry. Since the carrier is obligated to pay thousands and thousands of dollars to their clients if a claim is filed, you want the business with whom you’re entering into a contract to have money.

If the company doesn’t have money to pay claims, they will go insolvent, also known as going bankrupt.

The only way that a carrier can be financially strong is for the company to charge all of their clients adequate rates. If agents were allowed to low-ball rates just to attract clients, this would put the entire company at risk.

Having the right book of business and charging the right rates for the risk is a must for a carrier to be stable and competitive.

How do you check a company’s financial stability?
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You should never trust the rating that is found on the carrier’s website. It’s best to access sites like AM Best, Standard and Poor’s, and Moody’s so that you can pull up unbiased ratings.

Each of these consumer rating sites will issue grades that will indicate if the carrier is stable or not so stable.

Don’t Overlook the Importance of Customer Satisfaction Ratings

Complaints records are important, but most consumers don’t go as far as to file complaints when they aren’t happy.

What consumers will do is fill out satisfaction surveys, which is why customer satisfaction reports can actually be a better tool than customer complaint indexes.

The ratings can be focused on customer service, product offerings, contact methods, claims processing, claims settlements, and other factors.

Where can you find reliable customer satisfaction ratings?
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One of the most reliable customer satisfaction reports that you can reference each year is the one that’s published by JD Power and Associates. The company is dedicated to doing studies and reviewing all types of companies in the insurance industry.

Simply select the Insurance Shopping Study, and then you can see what real consumers have had to say about their companies. There is also a section for checking out the claims satisfaction rating.

If you’re only concerned with price, you can get quotes right away to find a deal. The price might be a huge incentive, but you must consider reputation too.

You need to find a company that’s licensed, reliable, honest, and customer service focused.

If you do all of the homework that you need to, you should be able to secure coverage with a good company. Make sure that you use an online rate comparison tool after you compare companies, and then you can buy.

Our online comparison tool is just a click away! Just click here to enter your ZIP code and get started!

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