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Questions to Ask When Deciding on an Insurer

Deciding between insurance companies can be a challenging task. Make sure you ask these questions before selecting an insurer.

  • Is the company licensed to do business in your state? Not all insurers are licensed to do business in every state. Licensure is important to consider when shopping for insurance rates because, without it, you would not be able to go to your state's department of insurance for help if you have a problem. To learn which insurers are licensed to operate in your state, contact your state's department of insurance or visit their website.
  • How competitive are the company's insurance rates? Price is, of course, an important factor when choosing an insurer. In order to determine which company has the most competitive insurance rates, you will need to do some comparison shopping. Rates can vary tremendously from insurer to insurer, so it is always worthwhile to shop around. Get a minimum of three quotes online, from agents, or from companies directly. Your state insurance department may also have a guide displaying the average premiums for various policies in different areas of the state.
  • Does the insurer offer what you need? Don't modify your coverage needs or preferences because one company has excellent insurance rates but poor coverage options. You want a policy that gives you the selection and range of protection that you require. For example, you might want an insurer that allows you to insure both your home and your car with the same company. In that case, you would need to choose a larger company with diverse coverage offerings. Similarly, you may need to supplement your homeowner's policy with flood insurance, but some insurers do not offer this coverage. Find an insurer that can meet all of your needs while still fitting into your budget.
  • Is the company financially healthy? Insurers' financial stability is particularly relevant to policy decisions because, without it, their ability to pay out claims could be jeopardized. If that were to happen, the purpose of having an insurance policy would be completely defeated. Consult financial ratings, such as those published by A.M. Best or Moody's, for assessments of insurers' stability. Don't solicit quotes on insurance rates from companies with poor financial outlooks or unhealthy credit ratings.
  • Is the insurer service-oriented? As you look for insurance rates, you want to focus on the companies that are most customer-oriented. You want an insurer that will handle claims quickly and fairly and will also be responsive to your questions and concerns. The best way to get a feel for this is to speak with current or former policyholders for their experiences. Additionally, your state's insurance department can tell you the customer complaint history of any insurer operating in your state.
  • Are you comfortable with the insurer? You should feel confident and at ease with your decision once you finish shopping for insurance rates. You should be certain that your insurer will be cooperative and easy to reach if you ever have to file a claim or ask a question. Talk to a customer service representative or an agent to evaluate your level of comfort with the insurer.