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Don’t Get Burned, Deal with A+ Rated Companies

ri-3The reason you should deal only with A+ or AAA rated insurance companies is simple. A company with an A+ or AAA rating has the money to pay off all its policies, so you don’t get burned. An AAA rated company is more likely to be around years from now and still paying claims.

That being said there is much more to insurance ratings than just those letters. The insurance rating system is actually easy to understand. Anybody who has graduated from elementary school can figure out the ratings.

The Big Four and Insurance Ratings

There are many firms that rate insurance companies – that is they examine them to see they are financially solvent, well-managed, well-funded etc. Yet there are only four ratings organizations that you should pay attention to: the Big Four. These are the ratings companies that the professionals use and they’re fairly reliable.

Slash Your Home Insurance Premiums. Search for Lower Rates The Big Four are Standard & Poor’s (S&P), Fitch, Moody’s and A.M. Best. Each of these companies employs a small army of analysts and researchers whose job it is to see how safe financial institutions such as insurance companies are.

When you see a rating for an insurance company make sure it is from one of the Big Four. If a rating comes from somewhere else get suspicious. There are fake ratings companies and fly by night insurance companies will try to pass them off as from the big four.

How to Read the Ratings

The best way to think of insurance companies ratings is as grades. The best grade is an A and a bad grade an F. The ratings system works much the same even though there are some cosmetic differences – some companies use a AAA as their best score while others use A+. It means the exact same thing.

Each of the Big Four explains its ratings and how they work. If you’re shopping for an insurance policy visiting their websites and studying the rating systems is a good idea. Fitch and A.M. Best both focus on the insurance industry so check them out first.

A good rule of thumb is that an insurance company should have a good rating from at least two of the Big Four. If you don’t see a rating from at least one of the Big Four on an insurance company’s website get suspicious.

Where to Find the Ratings

Insurance companies will usually post their ratings somewhere on their website. Generally, when a company gets a really good rating from one of the big four they’ll make a big deal of the fact. You should always get life insurance from an AAA-rated or A+ company because life insurance is often a long term investment. You don’t need as high a rating for other kinds of insurance such as car insurance.

However, ratings are not everything. The Big Four don’t evaluate companies for factors like customer service. They look to see if the companies are financially reliable. The ratings agencies don’t check to see if the companies answer their phone or have easy to use websites.

Make sure you deal with an AAA-rated or A+ rated insurance company but also make sure the company provides good customer service. Fortunately there are a many top rated insurers that offer great customer service.