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We have already seen Tests 1 to 5 in the previous posts to check and select the insurance company. In this blog post, we will end the series with the last tests which also plays key factors in the selection criteria.

Test 6: Renewal Rate Change

Many insurance companies offer an attractive discount rate for the first premium period to get you on their books. Once you are in, many companies will try to ripe you off by increasing the premium every other renewal. There might be other factors involved in the increase of insurance but most of the time they increase without giving any reasons.

After spending lot of time researching to buy insurance, nobody wants to change just after 6months or year and do go through the same cumbersome process. So, many of us try to stick with the same company even with increase because of this reason and insurance companies take it has an advantage for them.

You can check the renewal rate change rating in the above mentioned state websites which gives another clue about the insurance company. Try to score your insurance company according to their rate change ratings.

Test 7: Recommendations from your friends, local body shops

“Word of mouth” is a powerful marketing tool. It works well in almost all cases. Check with your friends and relatives or others that you can trust. See which companies they would recommend. Ask about their experience and get their perspective. You can even contact the local body shops or auto repair shops you always use and get their view point. They usually recommend insurance companies which encourages using OEM (manufacture parts) instead of aftermarket part. That’s another important factor to consider as you want your vehicle to be fixed with original parts instead of aftermarket parts.  Score the companies with the feedback from your friends and trust worthy person.

Finally, tally up the score for all the insurance companies in the list from each test criteria and you should have your own ranking for each of them. That surely would have narrowed down your list one or two companies which you can use.  Once you decide on which company you want to go, just go to their website to finalize your quote.

Conclusion

As it was bluntly mentioned at usnews.com, Car insurance is like betting against the odd. You pay a monthly fee to an insurance company.  They’re hoping that you won’t get into an accident. You’re hoping that you won’t, but betting that you will. If you “win,” the insurance company will pay your accident costs. If you’re not in an accident, the insurance company wins because they get to keep your money. Losing this bet isn’t bad, though. You won’t have to deal with being in an accident, and the longer you lose the bet by not getting into a wreck, the less you’ll have to pay the insurance company. But, the day you’re in an accident, you’ll be glad you’re covered by good insurance company.

Photo source: i-ehow.com
Sources: edmunds.com

In the last blog post, we discussed the first two tests, Cost comparison check and Compliant index check to start. This post, we will continue with 3 more tests which can be performed against the insurance companies.

Test 3: Ratings and Reviews

These days any type of consumer product or service gets rated and reviewed. There are only few reputed rating companies rating branded products giving guidance to the consumer. A well known name is J.D. Power and Associates’ which rates auto insurance taking lot of criteria’s into consideration.  You can find thee ratings for any auto insurance at jdpower.com

There are other third party websites which also gather the reviews of the insurance companies from the consumer. For example, this website http://www.automobileinsurancereview.com has the reviews for most well know insurance companies. But these reviews are more personal from the consumers and difficult to know the actual cause for the complaints so use them with your own discretion.

After checking the ratings and reviews, give scores to your list companies according to their ratings.

Test 4: Financial Strength

Many of the publically traded insurance companies are rated on their financial strength. A.M. Best and Standard&Poor’s, both of these companies publish financial strength ratings for all insurance companies — they measures insurance company’s ability to pay out claims. The A.M. Best rating is expressed as a letter grade from A++ (the highest) to D. Some companies may be assigned ratings of E (indicating regulatory action regarding the company’s solvency), F (in liquidation) and S (suspended). In any case, you should only work with companies that have at least a B+ rating.

The Standard&Poor’s ratings range from AAA (the highest) to CC. Some companies receive ratings of R (under regulatory supervision) and NR, which means ‘not rated’. The letter grades might be modified by a + or – mark. Consider only those companies that have at least a BBB rating. Insurance companies often provide this information on their Web sites, but if not, you can run a search at the A.M. Best and Standard&Poor’s sites or this site insure.com.

Keep in mind that these ratings have nothing to do with the way an insurance company treats its customers. It is only the rating of their financial strength. Give scores for your list companies accordingly.

Test 5: Customer Service&Support

A very important criterion to judge a company is by their customer service and support. These days many companies have website support. You can request quote, chat with the customer service personnel online and clarify your downs, maintain your account online, make changes, start a claim, make payments and renew your insurance. It’s all done without even talking to a person. It has become so easy after Internet revolution except their website should be fast and reliable enough to handle the customer traffic.

Check whether your insurance companies have fully organized website with support 24/7 and how fast they respond to your queries. It is very important to have faster response when you are in emergency situation. Give score to your list of companies by calling them or visiting their website.

Whenever I think of any insurance, a common phrase pops in my mind,

“Any insurance is only worth dollars, if and only if the insurance company is strong enough to pay you when needed”

We feel safe by having insurance so it doesn’t really worth a dollar if the insurance company won’t be able to pay for your claims. It will be a mere waste of money and can cause a financial turmoil in our life. That brings an important point, you better select the right insurance carrier for your insurance needs. It is totally our responsibility to do so.

Even with as many cars in the road, insurance companies still fight to get your business in whatever way they can. They always market their products like any other business person by buffing it up to attract you, the consumers. But it is us, the consumers who need to research about the insurance companies and make a sound decision to avoid getting trapped. It is not an easy task to judge a company but there are few simple tests that can help you determine which insurance company is better or best. 

If you are currently looking to buy auto insurance, first list down all the companies you short listed in a paper. Then try out these test criteria’s one by one and see how they score out of 10 points.

Test 1: Cost/Premium check

Cost (premium) is the key factor in many of our buying experience and one among many important parameters in our decision making process. As the saying goes, “You get what you pay for”, which holds true in insurance too. Lot of small insurance company’s charges little bit more compared to nationwide companies. But they work very closely with the insured taking care of their needs especially process the claims timely.  At the same time, big insurance companies which charges hefty premium and promises to offer premium service, fail to deliver them in the long run.

So don’t just make the decision solely based on the premium or cost of the insurance because premium is not just only based on the insurance company’s expenses. It is also computed taking lot of other factors into consideration like your credit rating, driver’s history, your age risk pool and many others. Keeping that in mind, try to use the cost as a benchmark to compare against different companies for the same level of coverage and give a score for your list of companies.

One more important thing, almost all sates have insurance commissioners who monitor the insurance rates to keep them under certain limit. It is regulated to certain extent so you won’t see a big difference.

Test 2: Complaints Index

Every business always has good and bad customers. Some really like the service and happy with it whereas others who had bad experience complain all about it. Insurance companies aren’t an exception. The best kept secret is the compliant records of the insurance companies. Your state, and every state, has a department of insurance. Here is the link for State of Texas. Due to lack of marketing, not many of us know about it. Most of them even have web sites, and many publish “consumer complaint ratios” for all of the insurance companies that sell policies in their state. This ratio tells you how many complaints an insurance company received per 1,000 claims.

If you can’t get complaint ratios for your state, you can get an idea by looking how a company treats it’s customers by checking the complaint ratios published by other states.  High number of complaints surely makes you pause for a moment, even if the company is financially appealing.

Check out the complaint ratio by visiting this site which has links for every state’s department of insuranceand see how your insurance companies scored according to their complaint ratio.

Additionally, the department of insurance websites often provides basic rate comparison surveys like the one by  Texas. It sheds you another clue about insurers who might suit your budget avoids taking trouble getting quotes directly.

Look out for other Tests in next blog post…