Buying Insurance

Lesson 1: The Basics

Insurance Company Ratings

Insurance companies are rated by alphabetical designations: A+,A,A-,B+,B,B-etc. The most widely recognized rating agency is the A.M.Best Company. Best's ratings are published annually. From the consumers point of view the primary purpose of the ratings is to reflect an insurance company's financial stability. In other words, for you the question is: will this insurance company be around and have the money to pay if I have a claim? Any of the "A" ratings signify very solid companies and would probably be your first choice. But a "B" rating does not necessarily mean an inferior company. Many factors impact a rating calculation and a "B" rating would still indicate a solid company worthy of your consideration. Most insurance companies are proud of their Best Ratings and indicate them prominently in their advertising. (Buyer beware: it is the absence of a rating that is a red flag. If you don't find a ratng--ask!) Ratings are not the only factor to consider when choosing an insurance company, but they are a good place to begin.

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