Insurance is always in the background of our lives, and it's easy to forget until we need it. Some insurance products, like auto, are required by the state. Others, such as pet and travel, are entirely optional. But a plan fitting your needs could save you thousands of dollars in an emergency with affordable monthly premiums.
Personal Finance Insider asks what it takes to balance cost and benefit. To assess insurance companies, we go beyond customer satisfaction and online reviews and delve deep into the coverage, customer service, company mantras, and other factors creating positive consumer experiences.
Comprehensive Ratings
We rate all categories on a scale of 1-5. While things like customer service and monthly premiums may be more evident to the average consumer, we consider other factors in our ratings just as crucial in finding insurance that performs when you need it most.
Each category gets unique ratings combined to get one average for each product. Some rating categories only apply to specific product types. However, we consider customer satisfaction and financial stability across the board. We also assign extra points when we find proof of ethical practices with no significant controversies or known misdeeds within the past five years.
Read on to see how we rate insurance products to give every reader the most objective ratings and comparisons.
Is There a Perfect Insurance Company?
Insurance is a game of risk with tradeoffs. Lower premiums could mean less employee training and fewer agents to support you when you file a claim or adjust your plan. It might also suggest lower death benefits and more restrictive underwriting. Coverage for a broader range of insured parties might lead to higher premiums and insurance agents who aren't familiar with the life insurance product you want. High customer service ratings could lead to lower financial stability if the company earns those ratings by giving customers whatever they want. Ultimately, lower financial stability could put you at risk of not getting your claims paid later, as the company could shut down.
We have reviewed a lot of excellent insurance companies striking a balance to serve customers better. These include both general providers and those offering specialty coverage. We evaluate all insurance types on a few fundamental bases.
Car Insurance
Car insurance is required in most states. It's also one of several options to establish "financial responsibility" in states that don't technically require auto insurance. Of course, nobody would ever need auto insurance in an ideal world. But in reality, a good auto insurance plan makes policyholders whole after an accident while simultaneously protecting insured parties from liability should they cause an accident.
Here are the rating factors we use specifically for car insurance.
Policy Types (Weighted 20%)
Many top-performing insurance companies also use restrictive underwriting. In this context, an auto insurance company may offer coverage solely to drivers with a clean driving record and minimal risk factors.
Companies using restrictive underwriting and dropping insured drivers over one ticket or accident receive a one-star rating for policy types. Companies covering a more diverse range of drivers (foreign nationals, families with teen drivers, etc.) earn a five-star rating on this metric.
Average Premiums (Weighted 10%)
Which companies offer the lowest premiums for the same basic coverage? We're not looking for companies cutting coverage to give you an artificially low price. Instead, we compare quotes with comprehensive, collision, PIP, and liability coverages.
The most affordable companies receive a five-star rating in this section. One star would mean the company charges more than the industry standard without something to justify the higher costs.
Claims Paid (Weighted 15%)
Modern car insurance companies typically offer online claims and policy management. Many nationwide carriers also have apps, phone support, and more. We use trusted online resources to compare average claims handling times between car insurance providers.
High ratings go to companies offering web-based, mobile, and other resources with fast claims-processing times.
Standard Exclusions (Weighted 15%)
Every insurance company has to mitigate risk to stay in business. Our standard exclusions rating operates independently of affordability. So if a company covers drivers with a history of DUIs, but its premiums skyrocket, we still consider it as coverage offered.
Five-star companies in this area offer coverage to a wide swath of age groups, families, driving histories, and more. One-star companies only cater to specific groups (i.e., military, teachers, medical workers, etc.).
Agents (Weighted 10%)
Modern drivers continue to see innovations in technology across the board. The agents who help you with insurance are no different. Some customers prefer to go into an office or get on the phone with a live agent. Others prefer to get a quote online without talking to an insurance agent.
We assign five-star ratings in this area to companies with options to purchase policies online or through broker agents who can run multiple quotes to find a good fit for the individual driver. Low ratings go to companies with no online quoting, only selling policies through agents who work specifically for the company.
