5 Reasons to Check the Company Ratings for Discount Auto Insurance Online

With the Internet, insurance customers have more options than ever. However, while this is mostly good news for consumers, there are opportunities for less reputable companies to reach more people than ever.

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A great way to protect yourself when shopping for car insurance is to check independent sources to learn the ratings of companies that interest you. Here are five reasons to check the company ratings for online discount auto insurance.

Licenses

Before an insurance company can operate in any state, it must be licensed in that state. Just because a company is legally able to operate in one state, it does not mean that it is legal for it to sell insurance in other states. Just as customers must follow state laws, carriers must do so, too.

When you are looking for insurance and find a quote, especially from a company you have never heard of before, it is a smart idea to check to make sure it is licensed to do business in your state.

If they do not have a valid license, the policy they are trying to sell you is not valid either. Run–do not walk–away from such a company.

There is an easy way to find out whether a company is licensed in your state. Use your search engine to find the Department of Insurance in your particular state. Some states have slightly different names for this department, like Department of Insurance Commissioners. Nevertheless, a quick search should get you to the right place.

Each state department of insurance website lists all the licensed companies in that state. It also will have contact information for those companies, so you can easily find them. There is a wealth of other information about each of these companies on these state websites.

Also, beware of any insurance offer that comes to you anonymously via email. Most of these are frauds. Always contact the insurance company directly by finding their phone number in the phone book or by searching for it online, or through their website.

Financial Standing

Another important reason to check ratings is to see the financial strength of the company. If the company is in trouble financially, they might not pay claims as speedily as possible, or might not pay them at all. The worst-case scenario is the company folding, leaving you without insurance.

We buy insurance, in large part, to protect our financial assets.

If a company is having financial troubles of its own, it is probably not a good idea to entrust it with your finances.

Fortunately, there are several places to find information about the financial strength of these companies. Four primary agencies rate carriers for their financial standing, according to the Insurance Information Institute. They are A.M. Best, Standard & Poor’s, Moody Investor Services, and Fitch Ratings.

The institute says to keep two things in mind when looking at ratings about insurance companies.

First, check them independently, and do not just take the company’s word for it. Some carriers will emphasize a good rating from one company in one area but ignore a poor rating from a different company.

In fact, it is a good idea to get ratings from at least two or three of these sources.

The other thing to know is that each of these four companies uses a different rating scale. An A from one company will not mean the same thing for another company. The institute gives a rundown of the ratings used by each of the four companies mentioned here.

You can also find that information from the ratings companies themselves. For example, A.M. Best gives a detailed explanation of its ratings.

The beauty of these ratings is that they come from companies completely independent from the insurance companies. Insurance companies do not pay them for this service.

Another independent source is your state’s department of insurance. These websites feature plenty of information about insurance companies, particularly regarding their financial standing. However, the difference between this website and the ratings agencies is that the results published on it target your geographical area directly.

Payment of Claims

Another area that you will want to investigate is how promptly the companies pay claims. Some companies have a reputation for delaying claims and inventing roadblocks in an effort to avoid paying them.

Even if they offer lower rates than any other company, this is not the kind of company that you want to be associated with. Whether they are trying to avoid paying you or someone else, like a driver you hit with your car, this will cause more headaches than it is worth.

One place to check for information regarding this is the complaint level filed with the state department of insurance. Along with the financial information about the company, the site also lists a complaint ratio.

You can also check J.D. Power & Associates, which rates the companies in several areas. One such evaluation point is in the way carriers handle auto claims.

On this site, you can get a good idea how other customers rate the company you are looking at. You can also search for a company that has a certain rating.

Customer Satisfaction

Another reason to check ratings for insurance companies is to get an idea of how other customers are generally satisfied with the company. This takes into account many factors, like how responsive the agent or phone representatives are, how easy the website is to navigate, how they handle auto claims, and many more.

In addition to ratings for handling auto claims, J.D. Power & Associates issues ratings based on the purchase experience, premiums, the kinds of policies offered, billing and payment procedures, and how well the carrier contacts you with any issues.

Consumer Reports is also a good place to check. In its auto coverage buying guide, Consumer Reports recommends checking its ratings, which result from a survey of almost 30,000 people.

If you compare companies’ ratings from various sites, you will find the same companies showing up under the “very good” sections repeatedly, and a pattern of the not so good companies emerging.

This can help you decide whether to buy that policy from a discount auto insurer or to keep on looking.

It’s Easy to Do

The final reason to check the ratings is that it is extremely easy to do. All the information is available online. Just a few minutes on the computer can save you many headaches down the road.

An insurance company that causes you many problems is not worth any amount of savings. Your auto coverage is an important tool designed to protect the money, savings, home, retirement accounts and other possessions you have worked hard to acquire.

If you are in a car accident, insurance pays the other driver so you do not have to. It also pays for your medical expenses so you are not hit with massive bills because of an accident.

While we all want to save money on car insurance, the goal is to make a smart, as opposed to a fast, purchase.

You also need to make sure you are getting a good policy from a solid company. While some discount auto insurance is legal and solid, you will not be saving any money in the end by getting a policy from a company that deals in fraud. This is why preparation and investigation before your purchase are crucial.

Alternatives to Discount Auto Insurance

If you are unable to find a discount auto insurance provider that has ratings you are comfortable with, there are alternatives.

Even with the big name insurance companies, you might be surprised by how competitive their prices are. These companies offer a multitude of discounts that can bring your premium down. This would include a safe driver discount if you have not received a ticket or caused an accident in the last three to five years.

You can also see a significant savings if you do not have your auto and car insurance with the same company. By looking for a company that you can buy both types of insurance from, you will save on covering both because of a multi-policy discount. The same applies if you have a boat, RV, or camper.

Many discount auto insurance companies are able to offer such low prices because they only provide the state minimum required amount of insurance. While most financial experts and insurance agents recommend buying a higher level of coverage, you are not required to. You can buy the state-required levels from any insurance company in the state.

You can also raise your deductibles to lower your car insurance premiums. Raising them to $1,000 can lower premiums as much as 40%.

Just remember that the deductible is the amount you will have to pay for any repair. Therefore, you will want to make sure you have that amount always on hand, like in a savings account, in case of an accident.

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