October 21, 2012
Automobile Insurance Companies
...and their true underlying financial strength.
Few things are worse that signing up with an automobileinsurance company that won’t float the boat if they receive a flood of claims all at once (no pun intended). However, such a situation can, and has, occurred if a large natural disaster takes place and they receive thousands, or millions of insurance claims all at once. Legally, they are required to have a certain amount of reserves, but even this is not enough for some companies to survive at times. Even more so for smaller insurance companies.
Some well-known national companies will not even offer insurance to certain regions of the country where the risks are very high. Can you imagine the number of claims that are filed after a hurricane? Millions. Certain regions are definitely more prone to hurricanes than others.
In fact, although not a common occurrence, some companies have closed down altogether because their financial strength failed completely—some as recent as this year. Most of us heard that the insurance company AIG went bankrupt, but fortunately, they were able to transfer their clients to other insurance companies to continue their coverage. Their failure was more about market pressures than it was about people filing a lot of claims.
In order to better understand the financial strengths of insurance companies, we have provided a list of the top rated companies, according to Weiss Ratings. Weiss Ratings is an organization that rates the financial strengths and reliability of insurance companies.
More specifically Weiss rates the automobile insurance company underwriters. An underwriter is sort of the insurance company of your insurance company. In other words, they are the actual people that assume the financial risk to insure you. Your insurance company is mostly a sales and customer support group, and comprised mostly of brokers. In fact, there are far less underwriting companies than there are insurance companies. This arrangement actually makes it safer for everyone.
When you are shopping for insurance, you will usually become informed at some point of who your underwriter will be. If they are on this list, you can be rest-assured that their chances of sticking around longer are much greater than other lesser-rated automobile insurance companies.
UNITED SERVICES AUTOMOBILE ASN TX A+
USAA CASUALTY INS CO TX A+
INTERINS EXCH OF THE AUTOMOBILE CLUB CA A+
PROTECTIVE INS CO IN A+
HASTINGS MUTUAL INS CO MI A+
AUTO-OWNERS INS CO MI A
SENTRY INS A MUTUAL CO WI A
COUNTRY MUTUAL INS CO IL A
KENTUCKY FARM BUREAU MUTUAL INS CO KY A
MERCURY INS CO CA A
For the most part, worrying about the financial strength of your underwriter shouldn’t be on the forefront of your mine because it is not often that they collapse. If you do hear of their difficulties through the news or other sources, you may want to consider changing insurance companies. Even if they did collapse, they would notify you and you would be safe as long as you did not need to file a claim at that time.
