Many people buy their auto, home, and other personal insurance policies from companies that are well-known, and which may have a strong marketing program, without giving any consideration to the insurance company's financial strength.  Just because an insurer has a great marketing department and a huge advertising budget doesn't mean they're in great financial condition and deserving of an insurance buyer's trust.  After all, you buy insurance in order to transfer your risk of loss and to gain peace of mind so you won't have to worry about what happens if you have a catastrophic loss.  If your home and possessions are destroyed by fire or tornado, or you or a loved one are seriously injured (or seriously injure someone else) in a car accident, you want to know your insurance company will be there to protect you.

To gain some perspective on the financial health of an insurance company, buyer's should consult the Best's rating guide to see how any insurance company they're considering is rated.  Ratings can be found on their website at the following address: You'll need to create a free user account to gain access to the ratings. 

Best's Rating Service is a leading authority on insurance company financial ratings.  Every year Best's reviews each insurance company's financial performance and underwriting practices and assigns a rating from A++ to F.  A++ is the highest rating available, and only a few insurance companies in the nation typically earn this rating. On the low end of the rating spectrum, Best's will assign an F to a company in liquidation.

We feel it's important to place your insurance company with an insurer that has a Best's rating of A- or better.   Most insurance companies and mortgage lenders would agree with this advice.  Many mortgage companies will not allow a new mortgage applicant to insure their home with an insurer rated below A-, as they want to be sure the insurance company that insures the house has the financial strength to be there through difficult times.  An insurance company that writes umbrella liability policies, the policy that provides excess liability coverage over auto and home liability policies, won't allow an insurer rated below A- to be the underlying carrier, as they also want to be sure the primary insurance company will weather any difficult times and be there when a loss occurs.

There are a couple well-known insurance companies in Michigan that have Best's ratings below A-.  A salesperson for these companies is not likely to point that out to customers and potential customers, so it's up to you to ask "What's your Best's financial rating?"

Posted 8:21 AM  View Comments

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