How Do I Know Which Auto Insurance to Trust?

Bad news for South Carolina policyholders rolled out on Thursday, July 12th, when about ten thousand of them received notice that their homeowner’s insurance was going to be non-renewed. Allstate customers dealt with the same scenario last year in North Carolina and affected approximately 30,000 homeowners.

Is it Bullying, Bad Business, or a Desperate Marketing Measure?

Allstate gave North Carolina policyholders a “choice” to bundle their home and auto to avoid the non-renewal notices sent to them last year. Allstate spokesperson Nancy Lemke said of those affected in South Carolina can “contact their agent to

discuss options.” (according to Online Auto Insurance News).

This “forced bundling” by insurance companies garnered the attention of legislatures and there was even a house bill in Maryland debated (and dismissed) earlier in the year to ban the practice.

Fight or Flight

While it seems to be unfair how Allstate is doing it, most agents will look for bundling opportunities for their customers to save them money, so it’s not necessarily a bad thing. However, the way Allstate is approaching it makes them look to many customers like the mean bully on the playground, even if they actually try to offer a real advantage. So, should policyholders just walk away from it or fight? What if you have just auto insurance with them? Does that make you nervous about the future of your auto policy if they’ll do that to so many peoples’ homeowners insurance? It’s things like this which can keep policyholders shopping around and scare them off. If you’re one who has concerns about your auto insurer, for whatever the reason and no matter who the insurer is, trying to figure out what to do next can seem daunting.

If you choose to ‘fight,’ or have decided to start finding out about other companies if you’re uneasy with whoever yours may be, how are you supposed to know who to get coverage from, and how are you supposed to get enough quotes to know you’re getting the best deal? Watch television for more than 30 minutes and inevitably you will see a commercial for auto insurance, each of them trying to convince you that they are the cheapest, best, or wittiest car insurance company.

But How Do You Know Who to Trust?

With so many auto insurance companies out there, and new ones popping up every day, how do you choose?

In the past, children going out on their own usually just went to their parent’s agent and had them write them a spin-off car insurance policy. They usually stayed with that company unless there was some major issue that caused them to switch. Now with all the

media exposure to insurance shopping, it has become more prevalent to shop every time someone doesn’t like the bill or on every renewal.

The good part about this is that auto insurers are now under more pressure to stay competitive and continually improve their processes and customer service. This translates into more accurate rates and improved quality for everyone.

But having the lowest rate will not make for the best option if that company goes broke before they can pay out your claim. So how can you determine stability in your auto insurance company?

First of all, look at their history. Have they been in business for a long time? How many times have they merged or been taken over? If a company has been in business for a long time, they have already proven that they can weather the storms, no pun intended.

Second, and just as important, there are several companies who provide a measure of stability and the financial strength for insurance companies. Among the most popular are Standard & Poors, Duff & Phelps, Moody’s, Fitch, and A.M. Best. Each

company has a different scale and way of measuring, but using any or all of them as a resource is vital when making decisions about auto insurance.

What if You Need the Cheapest Rate, Not the Most Stable?

Granted, there are some instances where financial stability of an insurance company takes second fiddle to affordability. However, skipping over this important piece of decision-making is only for the worst cases.

Some examples of this would be if a driver is in the highest risk and cannot afford insurance, or if there was a DUI or major violation that made all the other companies too high or ineligible. In these cases, spending from the least amount of time (six months) to the maximum amount of time (usually five years) in the cheapest company might be the only choice. One should only go into this type of decision with the intent of building their insurance history and good driving history so they can then move into a more stable and reputable insurance company as soon as possible.

How Soon Can You Move To a Standard Rate Company?

For those with decent driving records, six months to a year is enough time to then move to a better company. For those who have recent major violations, it may take three to five years to be in a better place to afford better insurance. During this time, it is vital that you take every precaution to drive carefully and not to incur any more points against your record or have any lapses in car insurance coverage

Whether you are looking for the most reputable company or the cheapest company, it is important to consider the financial stability of any of the companies you are considering. There wouldn’t be much point in saving ten dollars a month if it meant when you had a loss your insurance company couldn’t pay it.’

Don’t make the mistake of not checking out your insurance company! You need to make sure they can live up to their end of the contract and pay out if there’s a major loss, and remember—like anything, you get what you pay for.