Selecting an Insurance Company

For most, the selection of an insurance company is based upon one issue – price. Price obviously plays a very critical role in shopping for insurance. Let me suggest some other things to consider when selecting an insurance company (Source: Insurance Information Institute) …

Licensing. Not every company is licensed to operate in each state. As a general rule, it is good to work with a company licensed in your state because if you have a problem, you can rely on your state insurance department to help out. Go here to find a listing of companies licensed in your state.

Financial Stability. Insurance is purchased to protect you and your family financially and provide peace of mind. You should purchase insurance through a company that is solidly ranked in terms of credit (financial standing; likelihood of payout). It would be unfortunate to have the company be unable to pay because they’ve gone out of business. A.M. Best, Moodys, and Standard & Poors are three of the most common agencies that rate the financial strength of insurance companies.

Service. Your insurance company and its representatives should answer your questions and handle your claims fairly, efficiently and promptly. You can get a feel for whether this is the case by talking to other customers who have used a particular company or agent. You may also want to check a national claims database to see what complaint information it has on a company (state insurance departments provide this information on their website – see resources below). You have a right to quality customer service.

Comfort. Ultimately, you should feel comfortable with your insurance purchase, whether you buy it from a local agent, directly from the company over the phone, or over the Internet. Make sure that the agent or company will be easy to reach if you have a question or need to file a claim. You should never feel pressure to buy certain products – your agent should serve as an ‘educator.’

Complaint Index. If you find that after reviewing these items that companies are tied, a complaint index could serve as a good tiebreaker. A complaint index measures how many complaints are received over a period of time relative to the amount of money brought in through premiums. View Missouri’s complaint index. A national complaint database is also available.

Cost. Initially, I mentioned the importance of examining other issues, but there’s no denying the fact that price should be part of your “shopping equation.” Policies and prices will vary dramatically from company to company; as a result, most consumer advocates suggest pricing 3-4 policies before making a decision [use the Internet as well as agents]. Many state insurance departments publish guides to assist with your ‘insurance journey.’ See resources below for a link to all state insurance departments.

So whether your priority is to find a good neighbor; feel inclined to be in good hands; or have an affinity for lizards, shop around. Make sure you’re comparing apples with apples (similar types and levels of coverage). Lastly, review your insurance at least once a year to ensure that the company you’ve selected and the product you’re utilizing continues to meet your constantly changing needs.


INSURANCE RESOURCES.
- Information on insurance for various life stages
- NAIC “Insure U” – Get Smart About Insurance
- Shopping for insurance online:
---> Insurance Finder
---> Insure.com
---> Insurance Web
- State Insurance Department Websites
- What companies offer what insurance products in your state?