What makes a good insurance company?

Insurance is one of those things that you don’t think about until you need it. It’s the safety net that can protect you from financial disaster when life throws its unexpected curveballs. But with so many insurance companies and policies out there, figuring out what makes a good insurance company and which type of insurance to get can be overwhelming because you need to research different insurance providers and compare their policies side-by-side. Fortunately, you can compare with Assurance IQ, which helps guide you through the process and provides valuable insights to ensure that you make an informed decision on your insurance needs.

Insurance is a form of risk management that involves transferring the financial burden of potential losses from an individual or business to an insurance company. In exchange for regular payments, known as premiums, the insurer agrees to pay out a sum of money if certain events occur, such as property damage or personal injury. It is therefore important to make the right choice when deciding the company to choose for your insurance needs.

Related: Prepaid Insurance Journal Entry

What should I know before getting insurance?

The important thing to know before getting insurance is your current financial situation and the type of coverage you can afford. It will help guide your search for the right insurance policy. Then you need to find an insurance company that can meet your needs; consider their premiums, deductibles, limits, and exclusions. We will discuss these and other points in the following sections.

It is crucial to understand the terms of any policy before signing on the dotted line. Make sure that all details are clear and that there aren’t any hidden clauses or fees that could catch you off guard down the road. Don’t be afraid to ask questions if anything seems unclear.

Another consideration is if bundling multiple types of insurance with one provider could save you money in the long run – for example, combining auto and home insurance policies.

What makes a good insurance company?
What makes a good insurance company?

One important factor that people often leave out when choosing a good insurance company is the rating of the customer service. Read reviews from other customers online or talk to family members/friends who have experience working with different companies to get a sense of their reputation for handling claims efficiently and fairly.

It’s also important for you to know what your insurance coverage includes and what it excludes. It means knowing how much coverage they have in case something happens and checking if there are any limits on benefits or deductibles.

Also worthy of note is for you to know the premium of the insurance policy you are going to choose. The premium refers to the amount paid regularly towards maintaining the policy. Choose the plan that you can afford to avoid a lapse in coverage.

When assessing premiums, consider the long-term implications. Some insurance companies offer lower initial premiums but might increase them significantly at policy renewal or over time. Review the insurer’s history of premium adjustments and any information available regarding their pricing practices to ensure you can afford the premiums in the long run.

Be aware of your rights as a consumer when dealing with insurers; familiarizing oneself with state laws regarding claims filing can help prevent being taken advantage of during disputes over denied claims or delayed payouts. That’s the reason why you need to read reviews and ask those who have used a potential insurance company before you even choose. It is better to choose a company with great service and honesty than to look for those that are seemingly easy or cheap but may frustrate you with a delayed payout or give you headaches when you need the claims.

What should you consider when selecting an insurance company?

When selecting an insurance company, ensure you check for the financial stability of the company, the customer service reputation, type of coverage, terms and conditions, and compare the rates with other insurance companies.

See also: What is Accumulated Wealth? Strategies for Wealth Accumulation

What makes a good insurance company?

  1. Financial stability
  2. Good customer service
  3. Affordable premiums
  4. Straightforward and convenient claims filing procedure (Good Transparency)
  5. Have an extensive network of service providers
  6. Should have a valid license to operate

Financial Stability

A good insurance company should be financially stable and have the capacity to meet its obligations and pay out claims when the need arises. You can check the financial rating of the insurance company from agencies such as S&P, Moody’s, and A.M. Best Company. These agencies evaluate the financial health of insurers based on factors such as their assets, liabilities, cash reserves, and historical performance.

Don’t rely only on what the insurance company says about its ratings because some of these organizations may emphasize its higher rating from one agency while ignoring or being silent about a lower one from another agency.

A financially stable insurance company should be categorized as “Secure” or have a rating of “A+” or “A++” depending on the rating agency. Though the ratings may vary, do well to go for the one with the highest rating.

Each rating agency assigns a rating to an insurance company, usually in the form of a letter grade or score. For example, A.M. Best uses letter grades ranging from A++ (Superior) to D (Poor) to indicate the insurer’s financial strength.

Opting for a good insurance company with a strong financial rating helps mitigate the risk of choosing a company that may struggle to meet its financial obligations. A financially stable insurer is more likely to have the resources to handle large claim volumes and unexpected events.

Good customer service

Another thing to expect from a good insurance company with excellent customer service is its responsiveness and accessibility. How easy is it to reach customer support? and how fast did they respond to your queries and concerns? A reliable and good insurer should have accessible and responsive customer service channels, such as phone, email, live chat, or online support.

The last thing to check about a good insurance company is its ability to attend to you in terms of emergencies. The insurer should provide 24/7 support. Emergencies can happen at any time, so having round-the-clock support available can be beneficial. Check if they have a dedicated helpline for emergencies or claims outside regular business hours.

Affordable premiums

A good insurance company should give you value for your money and should be affordable. Look beyond just the price and evaluate the coverage limits, benefits, and overall protection the policy offers. A slightly higher premium might be worth it if the policy provides better coverage or additional features that align with your needs.

Compare the premiums across different insurance companies to ensure you are getting competitive rates. Does the company have the option to pay monthly or annually? A good insurer should have flexible payment options such as monthly, quarterly, semi-annual, or annual basis.

Straightforward and convenient claims-filing procedure (Good Transparency)

One of the qualities of a good insurance company is being very transparent about the procedures that policyholders need to follow to file for claims. A good insurer should be transparent and efficient with its claims process. The insurance company should also be timely with the payouts.

Have an extensive network of service providers

For some insurance plans that require service providers, such as health insurance, it’s important to evaluate the network and providers associated with the insurance company because some out-of-pocket costs may be reduced when you visit In-Network Providers. It means an insurance company with an extensive network of providers is better because you can easily have access to the nearest healthcare provider, lowering your out-of-pocket costs.

It should have a valid license to operate

When selecting an insurance company, ensure that the company is properly licensed and accredited. Licensing and accreditation are indicators of an insurer’s compliance with regulatory standards and industry best practices.

Check if the insurance company is licensed in your state, province, or country. Verify their license status by contacting the appropriate regulatory agency or searching their online database. Licensing ensures that the insurer meets certain financial, operational, and ethical standards. The inability to procure a license shows the company will not meet its obligation as well.

Having a license is also an indicator of financial stability and solvency of insurance companies. Regulatory authorities typically require insurers to maintain sufficient financial reserves to cover potential claims and meet their obligations.

In addition to licensing, some insurance companies voluntarily seek accreditation from industry organizations or associations. Accreditation signifies that the insurer has undergone a rigorous evaluation of its business practices, customer service, claims handling, and financial stability. A credible accreditation from reputable organizations, such as the National Association of Insurance Commissioners (NAIC) or industry-specific accreditation bodies, shows the insurance company is good.

Last Updated on November 2, 2023 by Nansel Nanzip Bongdap
Entrepreneur at Financial Falconet | Author's Bio Page

Nansel is a serial entrepreneur and financial expert with 7+ years as a business analyst. He has a liking for marketing which he regards as an important part of business success.
He lives in Plateau State, Nigeria with his wife, Joyce, and daughter, Anael.