How Automobile Insurance Policies are Rated?

Car insurance companies are assigned ratings by a variety of different organizations to help the public determine the quality and reliability of a given insurance company. Often, these ratings will reflect the level of satisfaction among customers of the company in addition to factors regarding the quality of their service from a general standpoint. The organizations that rate these auto insurance companies include Standard and Poor's, A.M. Best, and J.D. Power and Associates.

Each organization has a different approach to the rating process. For example, J.D. Power and Associates collects data from insurance policy holders all over the country, analyzes the data, and determines a rating based on a variety of different factors. These factors include the amount and quality of coverage options available to consumers, average cost of policies, level of satisfaction with the company's handling of accident claims, and level of satisfaction with the company's representatives.

A.M. Best and Standard and Poor's take a different approach than J.D. Power and Associates, but are similar to each other. Their rating systems are a bit more simplistic and tend to focus on the financial strength of the auto insurance company. A high rating by either one of these organizations indicates that the insurance company has a high probability of providing its customers with adequate compensation after an auto accident. For most insurance buyers, this factor is the most imperative aspect to consider.

As a buyer, you want to be sure that your auto insurance company not only meets the state's guidelines for auto liability insurance, but also that the company actually falls through on their promises. For this reason, you will want to look for a solvent auto insurance company. Your state also assigns ratings to the auto insurance companies in your area, which are important to consider to get a full understanding of how the company handles their business affairs. State insurance ratings are typically based on customer satisfaction and reflect the ratings of J.D. Power and Associates in terms of approach.