UPDATED: Mar 13, 2020
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Finding a quality insurance company or an experienced and friendly agent can be like choosing a parachute — you might not know what to expect until you have to put it to use! Fortunately, there are some ways to look into potential agents and insurance companies before you sign up for a policy. This article aims to give you a perspective on choosing different insurers and ways to do some research to make the best decision.
A Qualified Agent can be an Asset to Unsure Shoppers
Not everyone has embraced the fast-paced lifestyle that includes doing their shopping for car insurance online. We know that to some, it’s more important to have a name and a face attached to their policy, one who will take stock of their customer’s situation, advise them of the product possibilities, and ensure they’re properly covered for a good price.
Some questions to ask your insurance agent:
- Ask to see their insurance license. This may seem like a no-brainer, but it will keep you from getting scammed in the rare chance you walk into a shark’s office.
- Their college degree, which they may or may not have.
- Any special insurance certifications the agent may have.
- Their length of experience in the insurance field.
- What sort of continuing education they’ve been doing since obtaining their license.
In many ways, finding a quality agent is as easy as asking your family members and friends. First hand accounts from satisfied customers say a lot, and if you continue to hear positive things about a specific agency or agent, you may have found yourself a winner.
Check in with local doctors, body shops, and personal-injury lawyers to ask which insurers they recommend, and which ones they say to avoid. Try to find local businesses that advertise or tout their “consumer friendly” approach. Small businesses like these will have first-hand experience with good and bad insurers, and most will take a few minutes to make some recommendations. For body shops and doctors, ask a handful of basic questions:
- Which insurance companies do you recommend?
- Which are the cheapest, which are the most expensive?
- Which insurers have the best customer service?
- Which companies do you suggest I avoid?
Big Companies vs. Small Companies
Buying insurance from a major national insurer will usually get you the cheapest rates, but at the same time, you might be treated like just a number instead of a valued customer. A small insurer that covers your local region will often offer better service and treat you like a truly valuable customer – because for them, you really are. But keep an eye out for big insurers masquerading as small ones – ask the sales people and do some online research to determine if the “local” company is really just an extension of a major insurer with the same claims practices as the big corporations.
Standard & Poor’s outlines the corporate structure, subsidiaries, and ownership details of most major insurance companies. Use their search tool and simply type the name of the company, but leave out words like “insurance” or “company” from your search terms. Once you’ve found one, scroll down to the “related entities” section. For others not listed by S&P, try searching for companies with AM Best, Fitch Ratings, or Moody’s Investor Services, all of which offer ratings for major companies. If the company you’re researching is too small to be rated with any of these, go to the insurer’s website and read the “About” section, and look for the fine print at the bottom of the website to see if it is listed as a “product line” or subsidiary of a larger company.
Mutual Companies vs. Stock Companies
Just like big banks and smaller credit unions, insurers run the gamut from for-profit corporations to mutual companies that are owned by their customers instead of a board of investors. Mutual companies are owned by the policyholders; if the company profits over a given fiscal period, it can either add the money to its resource pool or distribute it back to the policyholders in the form of a dividend payment.
Shareholder-owned companies pay out profits to their investors, and, generally speaking, are under more pressure by investment boards to keep costs down and deliver record profits on a yearly basis. A 2008 article by Forbes magazine outlines the pitfalls that privately-held insurers suffered after the ’08 financial crash, as well as the pressures placed on those companies by their shareholders in the interest of profits.
In their book, “From Good Hands to Boxing Gloves,” authors David Bernardinelli and Michael Freeman detail how many large insurers have refocused their business models in recent years to emphasize profits over customers. With many stock-owned insurers, you may experience cheaper premiums in the short term, but risk a potentially nasty claims experience in the future if you sign on with a cheapskate company.
Check With Your State’s Insurance Regulatory Department
Each of the 50 states have their own regulatory market for auto insurance, and not all companies sell insurance in every state. You’ll need to know about the ones that do business where you live, and you’ll find that information on your state’s website. You will also have access to things like an insurance company’s consumer complaint ratio, which shows how many complaints an insurer has received from its customers for each 1,000 claims filed. Some states even provide rate comparisons. You can find your state’s department of insurance web site located here.