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How Strong is Your Auto Insurance Company Financially

When you are shopping around for auto insurance quotes, one important thing to keep in mind is the financial strength of your auto insurance company. How would you like to pay your premiums diligently, like a good auto insurance customer, then get in an accident only to find out that your company wasn't in a financial position to pay you what you're owed? This is especially important in the case of natural disasters, which can cause a tremendous amount of damage, and result in a lot of claims at the same time. If your auto insurance company isn't in good financial health, they may not be able to bear this additional strain. Therefore, it's best to check out the auto insurance carriers financial health before you buy.

So, how do you do this? Well, there are two easy to find resources at your disposal:

1. A.M. Best is a company that publishes insurance companies financial strength ratings. The purpose of these ratings it to let the consumer know the insurance companies ability to actually pay a claim. A.M. Best's ratings range from A++, which is the best, to D. Ratings of E indicate regulatory action, F indicate that the company is in liquidation, and S means the company is suspended. Only choose companies with B+ ratings and above.
2. Another company that provides ratings on insurance companies financial health is Standard & Poor's. Their ratings go from a top rating of AAA down to the bottom which is CC. A rating of R indicates that the company is under regulatory supervision, and NR means that the company is not rated. You should only look at companies with a BBB rating or above.

You may be able to find this information on companies websites. If they are in good financial shape you would think they would want to advertise it. If not, you can also search at the A.M. Best or the Standard & Poor's website.

As always, do your homework and shop around for auto insurance quotes before you buy. Be sure to check out the companies financial strength, and remember that this rating has nothing to do with customer service, simply the companies financial strength.

Read Your Auto Insurance Contract and Look For These Clauses BEFORE You Sign

Alright, let's say you've followed our advice and shopped around for auto insurance quotes. You've got the lowest auto insurance quote in front of you and you're ready to sign. BUT WAIT. There are two clauses that you must look for in your auto insurance contract.

1. Your right to sue - Some companies will throw a clause into the agreement where you will be forced into arbitration in the case of a disagreement, instead of being able to take the case to court. If at all possible you don't want to give up this right. Doing so will make it easier for the insurance company to take advantage of you. Since contracts are mutual agreements, it may be possible to cross out this part of the contract. If the insurance company will not agree to this, it may be best to start looking elsewhere.
2. Aftermarket parts requirements - if you see statements such as "new factory", "like kind and quality", or "aftermarket parts" in the contract regarding the parts the repair shop will be able to use in the event of an accident, move on to the next auto insurance company. Aftermarket parts aren't well regulated at this point, and are considered by many to be substantially inferior to the factory parts. It is much easier to just research auto insurance companies that will provide factory parts, then to haggle with a company over the parts to be used after there is an accident.

After you shop around for auto insurance quotes, make sure that you follow through and read the contracts. Yes, I know it is boring, but the time you spend in the beginning will save you a lot of time and frustration later on. Happy shopping!