Choosing the right insurance company to protect your property is an important decision many of us will eventually face. Many popular, large insurance companies are financially stable, but what about the smaller companies you don’t hear much about? It’s wise to make sure whichever carrier you select is financially strong enough to pay the claims of its customers, especially if a disaster were to strike, like a car accident or flash flood. You may be able to find great savings with a smaller insurance carrier, but it’s a good idea to research financial ratings before buying a policy.
What are A.M. Best ratings?
There are several independent agencies, like A.M. Best, which rate the financial strength of insurance companies. Each of these agencies uses its own rating scale and rating standards when evaluating insurers.1 Of the five major rating agencies, A.M. Best has been in business the longest, since 1906.2 Answer Financial uses A.M. Best as one of our criteria when rating the insurance companies we place our customers with.
Each year, A.M. Best publishes its, Best’s Insurance Reports, and rates property/casualty insurance companies using an alphabetical scale. Answer Financial works with many carriers that have high A.M. Best ratings.
What does A.M. Best stand for?
Founded in New York City by Alfred M. Best in 1899, credit-ranking agency A.M. Best focuses on the worldwide insurance industry. Since its humble beginnings as a privately held company in Oldwick New Jersey, A.M. Best has been designated by both the U.S. Securities and Exchange and the National Association of Insurance as a nationally recognized statistical rating organization.3
Why are A.M. Best ratings important?
Of all the rating agencies, A.M. Best is the only one that solely specializes in the insurance industry. Others – like Fitch, Moody’s and Standard & Poor’s – rate a broad range of debt instruments from both the public and private sectors, including insurance.What makes A.M. Best’s rating system unique is its focus on the ability of insurers to pay claims and the credit quality of its obligations. 3
To look up the most recent A.M. Best ratings and reports for free, you can visit the A.M. Best website at www.AMbest.com. You’ll need to create a log in before viewing any ratings or reports. Most of its services are free because insurance companies pay A.M. Best to have their information listed on its site and in its reports. To locate a rating on the A.M. Best website, type in the company name under the “search ratings” bar.2
A.M. Best rates insurance and reinsurance companies on a scale that includes seven categories, ranging from “A” to “D.” Ratings are then supplemented with “+” or “-“ signs to specify the exact level, which is sometimes referred to as “rating notches.”4
Figure 1. Guide to Best’s Financial Strength Ratings from AM Best (2023), https://www.ambest.com/ratings/guide.pdf
What is the best rating for insurance companies?
Since each rating agency uses its own set of guidelines and criteria to rate insurance companies, our experts recommend checking several if you are uncomfortable or have any hesitations before buying an insurance policy. They all use a variance of alphanumeric scales to rate insurance companies. Most of these ratings are available for free, but you’ll likely have to become a member, or create a log in, to be able to access any information.
Who is Answer Financial?
Looking up ratings for every insurance company you’re interested in shopping with can be time consuming. That’s why your insurance experts at Answer Financial can do the research for you! We work with 40+ top-rated insurance companies (per A.M. Best’s ratings) to find our customers the right plan for their needs and budget, regardless of their driving history.
As one of the nation’s largest and most reputable auto & home insurance agencies, we’ve insured nearly 5 million homes and vehicles. On our website, you can shop for insurance the smart way by reviewing rates side-by-side from multiple insurance companies, purchasing policies and saving often. Our customers an average of $565 a year on insurance.* That’s probably why 95% of our reviewers say they’d recommend us.**