7 Key Tests to choose the right Auto Insurance Company – Part I

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…

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