Reader’s Question:

Can anyone explain how A.M. Best rates an accident insurance company?

Celine

Chicago IL

A.M. Best is just one of the companies that rate the many accident insurance company in the market. In buying your insurance policy, it is important to know more about the company offering it. Reputation and customer service are important but so is financial strength. A company that has good financial strength means it has the ability to pay the claims of its customers.

A.M. Best, like other ratings companies, are independent of the insurers that they rate. You can expect then unbiased reporting of facts. Put it this way. A.M. Best is the professor while the insurance companies are the students. If you want to know what a student’s grade is, you approach the professor right?

For an accident insurance company to be considered at least stable by A.M. Best, it needs to have at least a C or Fair rating. This signifies that the company has the fair capability to meet its financial obligations.

The highest grade that a company can get is A+ or Superior rating. Companies that carry this rating means that it has proven that it has superior ability in meeting the claims of their customers. An A or Excellent rating means that while the company is not as strong as those who have A+ ratings, they are more than capable of meeting the needs of their policy holders.

After A comes B+ or Very Good. See the pattern here? It really looks like a college grade doesn’t it? After B+ comes B or Good. Companies that carry these ratings can still meet the obligations but nos as strong as A-rated companies.

What about D or lower? I’ll be surprised if they still manage to operate. Insurance companies that have these ratings mean that they are in deep in trouble and have the possibility of closing down.

That’s it for A.M. Best ratings. If you’re not satisfied with it, you can visit other companies that also rate accident insurance company. In most cases though, they generally tend to have the same observations since they are using the same data.