Who are the best insurance companies?

In a nutshell, the best insurance companies are the ones who best keep their customers satisfied. Buying insurance is not necessarily the same as buying tangible goods likes cars or boats; so attempting to quantify and decide who’s the best is an almost impossible task.

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With cars we can look at hard numbers like gas mileage, repair incidents, and safety recalls. With insurance we must look at customer perceptions of service and financial stability.

Financial Strength Ratings

While consumers rate their insurance companies based on price, coverage, and customer satisfaction, industry players rate them according other factors. While there is some difference in how health insurance companies and other insurers are rated, there are things that are important to all. One of these factors is financial strength.

Insurance companies make their money by investing what they take in from customer premiums. They bank on the fact that their investments will give them a higher return than what they will pay out for claims made by those they insure. In most cases this works out just fine. But if a company is rated as having poor financial strength, it means their investments have not performed as well as they should have.

According to the Top Rated Insurance Companies website, the best insurance companies of 2009, rated by financial strength, included well-known names like Allstate, State Farm, Prudential, Travelers, and Fidelity. Independent entities that offer ratings of financial strength include A.M. Best and Standard & Poor’s.

Ratings by Product Type

Various web sites and industry trade groups conduct regular surveys with customers in order to rate insurance providers. When surveys ask about specific insurance products rather than general questions of customer satisfaction, the results can be interesting.

As an example, customers may rate a company like Progressive or Geico as being very strong for auto insurance, but weak for homeowners insurance. Travelers or Allstate may be rated just the opposite.

Then of course, there are many insurance companies dedicated to a single product like life insurance. Finding the best insurance companies sometimes means splitting up your coverage depending on which providers meet specific policy needs.

Read more: What are the best life insurance companies to work for?

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The Best Health Insurance Companies

Health insurance is a type of coverage unlike any other product on the market. Insurance typically provides financial compensation if and when a covered circumstance causes loss to be incurred by the insured individual. For example, your auto insurance compensates you only if you have an accident.

You’re taking the risk of losing the money if you never file a claim, while your insurance company takes a risk of having to pay out a claim greater than what you paid in premiums.

With major-medical health insurance, things work pretty much the same. But with HMO insurance, the coverage really isn’t true insurance in the traditional sense of the word. Rather, the vast majority of insured people incur at least as much cost as they and their employers pay into the plan. This means that the HMO plan is essentially nothing more than a third-party payment system. You pay them, they pay your bill.

The best health insurance companies understand this dynamic and strive to keep costs as low as possible. They do so by offering plans outside of the standard HMO and requiring customers to participate in paying the doctor bills. They don’t force unnecessary coverage, such as obstetrics coverage for post menopausal women. They also refrain from requiring excessive testing, such as screening for sickle cell anemia among ethnic groups that rarely contract the disease.

The Best Life Insurance

Lastly, life insurance is one kind of coverage that will always be used by the purchaser, provided he maintains his policy until his death. The best life insurance companies are those who provide a realistic premium to benefit ratio, so as avoid charging some individuals too much and others too little.

Term policies will be somewhat less expensive due to the fact that policy holders come and go regularly. Whole policies will cost more in premiums, but once paid in full, the customer will have coverage the rest of his life at no additional charge.

Both types of life insurance should have a benefit that will cover all funeral and burial expenses, unpaid medical bills, and support to needy family members if the deceased was a substantial contributor of family income. Beware of life insurance polices that pay out only a few thousand dollars. You can blow through that amount in just the cost of a casket.

In the end, the best insurance companies are the ones that keep their customers happy. There are enough of them out there to make it possible for you to find what suits you. Now it’s time to start your search. Get online quotes from the best insurance companies right now, by entering your zip code into our free search tool.