Car insurance ratings can help you find an insurer that is both financially sound and deals with customer service and claim issues quickly and fairly.
Rating agencies such as AM Best can help you gauge the financial strength of an insurance company, which is important to know – you want to be confident that your insurer has the financial strength to pay out a claim when disaster strikes.
J.D. Power and the National Association of Insurance Commissioners, or NAIC, publish rankings based on customer satisfaction, credit ratings and complaints.
- Insurance ratings comprise a score that a rating agency creates to convey the complete financial strength of an insurance company.
- Always check the financial strength of any insurance company you are considering when shopping for a new policy.
- If your insurance company doesn’t have the financial strength to pay claims when a disaster strikes, your insurance is not protecting you or your car.
What are insurance company ratings?
Insurance ratings comprise a score that a rating agency creates in an easy-to-read format. These rating agencies look at various factors, including a company’s financial strength, how the company is run, and the people in key leadership positions.
Rating agencies will also look at any external factors that could impact its financial strength, such as vulnerability by its policyholders to storm claims or other natural disasters.
What are financial company ratings based on?
Financial ratings are based on various criteria to ensure they encompass all facets of the insurance company’s business. Rating agencies want to be confident an insurance company can handle a weak or struggling economy, a major natural disaster resulting in a huge spike in claims and other factors that could impact their ability to pay out claims.
Each rating agency has its own proprietary formula for setting a rating, but generally, they all use the same data so ratings should fall in the same general area. If one rating agency rates an insurer dramatically lower than others, look closer to determine why.
Here are some common factors a rating agency will look at when a credit rating agency establishes a rating:
- Cash on hand: Does the insurer have enough cash to deal with everyday business expenses and the ability to pay out claims?
- Debt ratio: This is simply the company’s debt divided by its financial assets. A high debt ratio can indicate financial trouble.
- Revenue streams: A company with multiple revenue streams is typically stronger than one that gets most of its revenue from a single source. Large, nationwide insurers also offer additional financial services and multiple lines of insurance, giving them numerous revenue streams.
- Risk management: Insurers must decide if a potential client is a good risk, and their risk management protocols determine who they offer a policy to and their rate. They may have very risky policies if their risk management protocols are poor.
- Insurance policies: Companies that only write one type of coverage or mainly insure high-risk drivers or homeowners often have lower financial ratings. Seek insurance companies that offer a wide variety of policies and don’t only offer high-risk coverage.
What are AM Best ratings based on?
The chart below explains what the various grades for AM Best mean.
| Rating categories | Rating symbols |
|---|---|
| Superior | A++ |
| Superior | A+ |
| Excellent | A |
| Excellent | A- |
| Good | B++ |
| Good | B+ |
| Fair | B |
| Fair | B- |
| Marginal | C++ |
| Marginal | C+ |
| Weak | C |
| Weak | C- |
| Poor | D |
| Under Regulatory Supervision | E |
| In Liquidation | F |
Auto insurance company ratings: AM Best
See AM Best scores for the largest auto insurance companies in the U.S. in the table below.
| Company | AM Best Rating for 2022 |
|---|---|
| State Farm | A++ |
| Progressive | A+ |
| Geico | A++ |
| Allstate | A+ |
| USAA | A++ |
| Liberty Mutual | N/A |
| Farmers | A |
| Travelers | A++ |
| American Family | A |
| Nationwide | A+ |
What are J.D. Power’s ratings based on?
This consumer research company issues auto insurance reviews yearly on various factors – for example, the U.S. Auto Claims Satisfaction Study and U.S. Insurance Shopping Study are the major surveys J.D. Power conducts.
The auto claims study features overall nationwide scores, while the insurance shopping study breaks insurance company scores down into large insurers and midsize insurers.
Auto insurance company ratings: J.D. Power
See scores from the largest auto insurance companies in the U.S. in the table below for J.D. Power’s overall customer satisfaction rating from its 2022 U.S. Auto Claims Satisfaction Study. Scores are out of a total of 1,000 points.
| Company | J.D. Power Overall Customer Satisfaction Ranking |
|---|---|
| State Farm | 882 |
| Progressive | 861 |
| Geico | 874 |
| Allstate | 889 |
| USAA | 890 |
| Liberty Mutual | 870 |
| Farmers | 882 |
| Travelers | 854 |
| Amica Mutual | 903 |
| Nationwide | 868 |
What are NAIC ratings based on?
NAIC’s Complaint Index Score is a tool for measuring a company’s performance in terms of customer complaints. A score of 1.0 denotes an average volume of complaints. If a company’s score exceeds 1.0, it signifies that it is dealing with more complaints than the typical company. Conversely, a score less than 1.0 indicates a company receiving fewer complaints than the average.
This site’s complaint index assigns insurers a score based on how many complaints the insurer received compared to the number of policies it sells. This gives you a clear picture of insurance providers and how often they receive a complaint.
Auto insurance company ratings: NAIC
See NAIC scores from the largest auto insurance companies in the U.S. in the table below.
| Company | NAIC Score |
|---|---|
| State Farm | 0.70 |
| Progressive | 0.83 |
| Geico | 0.62 |
| Allstate | 0.96 |
| USAA | 0.85 |
| Liberty Mutual | 2.46 |
| Farmers | 1.09 |
| Travelers | 0.49 |
| Nationwide | 0.34 |
Why are insurance company ratings important?
If your insurance company doesn’t have the financial strength to pay claims when a disaster strikes, your insurance company’s ability alone is not protecting you or your car.
Being able to depend on the financial obligations of your insurance company when a natural disaster or other covered peril hits your home or car is key, so it is important to check the financial strength of any insurance company you are considering buying a policy from.
Insurance companies can and do go bankrupt. They may underprice their policies or end up with more claims than anticipated. Regardless of the reason, if your insurer declares bankruptcy when you have a claim in process, there is a good chance you will not be paid out.
Always check the financial strength of any insurance company you are considering when shopping for a new policy.
How to check insurance company ratings
Visit the rating website directly and search for your insurance company by name.
“Consumers can check the financial stability and customer service performance of their insurer through credible third parties. This includes its claims-paying ability and how it handles other customer service issues,” says Mark Friedlander, director of corporate communications for the Insurance Information Institute.
He gave the following advice for checking insurance company ratings:
- AM Best: Provides a financial strength rating, which rates the company’s financial health and its ability to pay claims. We recommend consumers choose companies that are rated either Superior (A+ or A++) or Excellent (A or A-) to ensure they are protected by a company that is fiscally strong and can pay a high volume of claims in the event of a natural catastrophe, such as a hurricane, wildfire, tornado or flood.
- J.D. Power: Conducts national and regional consumer surveys to determine how satisfied policyholders are with the customer service provided by their insurer. Consumers may want to reconsider being insured by companies that are consistently rated below average compared to their peers, especially in the way they handle claims.
- National Association of Insurance Commissioners (NAIC): Tracks the number of complaints filed by policyholders with state-specific departments of insurance. A company with an above-average volume of policyholder complaints is a red flag.
Final thoughts on insurance company ratings
Insurance company ratings can give you visibility into a company’s financial strength, ability to pay out claims, customer satisfaction for claims service and more. Ultimately, shoppers must choose an insurer that offers the best policy and customer service at the best price.
Resources & Methodology
Sources
- A.M. Best. “Financial Strength Rating.” Accessed October 2023.
- J.D. Power. “Auto Insurance Shopping and Switch Rates Reach New Highs as Premiums Surge, J.D. Power Finds.” Accessed October 2023.
- J.D. Power. “Insurers Struggle to Manage Expectations in Auto Claims Process as Repair Times Increase, J.D. Power Finds.” Accessed October 2023.
Methodology
CarInsurance.com editors in 2023 collected rates from Quadrant Information Services for a 40-year-old male driving a 2021 Honda Accord LX with a good insurance score and no violation on record for a full coverage insurance policy with limits 100/300/100 and $500 comprehensive and collision deductible. We analyzed 5,000,736 records, 1,467 ZIP codes and 212 insurance companies nationwide.
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Laura Longero
Executive Editor
Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.
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John McCormick
Editorial Director
John is the editorial director for CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, John was a deputy editor at The Wall Street Journal and had been an editor and reporter at a number of other media outlets where he covered insurance, personal finance, and technology.
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Leslie Kasperowicz
Executive Editor
Leslie Kasperowicz is an insurance educator and content creation professional with nearly two decades of experience first directly in the insurance industry at Farmers Insurance and then as a writer, researcher, and educator for insurance shoppers writing for sites like ExpertInsuranceReviews.com and InsuranceHotline.com and managing content, now at CarInsurance.com.
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Nupur Gambhir
Managing Editor
Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.