Auto Insurance Co

Reader’s Question:

I’ve been reading about how an automotive insurance company is rated. What’s the difference between A.M. Best Ratings and J.D. Power Ratings?

Bruce

Cincinnati OH

Both of them rate how an automotive insurance company stands. First let’s take a look at J.D. Power Ratings. What JD does is to collect data from different individuals around the country that has insurance. They then rates them policies according to different factors like price, coverage, and claims handling. JD also includes in their ratings the individual’s satisfaction with the company and its representatives and their overall experience. In order to find out what I mean, you have to go and visit their site. There you will see just how different insurance companies compare with each other.

A.M. Best Ratings on the other hand looks at the financial strength rating of an automotive insurance company. What this means is that they measure if the company can pay any claim made. Unlike with JD. A.M. Best ratings does not include how the insurers relates with their customers.

In general, these ratings are something of a formality. Why? Because if the insurance company you plan to buy coverage is well known then chances are you are in good hands. Further, insurance agents are not likely to refer you to insurance companies that have unreliable financial status. Going to A.M. Best works well if the company you are eyeing is small and unfamiliar.

So how does A.M. Best rate companies? They use letters with A++ as the highest and D as low. They also use other letters like E which means that the company is currently facing regulatory action on its solvency. F on the other hand means that the company is undergoing liquidation and S means the ratings on the company is suspended. To be on the safe side, choose a company that is rated at least B+.

I hope this answers your question. Remember that JD and A.M. Best rate an automotive insurance company differently. It is best that you read what they have on a company side by side.