How to Choose Right Insurance Company
When shopping for insurance company, you need to consider many factors. But in most cases, the first or only thing that some people look for is the insurance company that offers the cheapest quotes. Of course, there may be nothing wrong in seeking for a way to cut costs so that one can make most of every dollar that he earns. Nevertheless, when it comes to insurance, there can be more to the price of a product or service. If you make only price your focus for choosing an insurance company, you can be missing the point. Unfortunately, if you make a mistake of choosing a wrong insurance company, you may not know immediately. You will only know that you have made a mistake in your choice by the time you don’t get the needed help or assistance when required. This can be very painful.
So, how do you know whether an insurance company is good or not? There are some factors you will need to consider before you can reach a conclusion that you have chosen a right insurance company. Some of these factors are discussed below and I called it qualities of a good insurance company.
Read Also: How to Get Really Cheap Car Insurance Quotes
Qualities of a Good Insurance Company
- Customer Service: Insurance has a lot to do about quality delivery of service. Insurance companies are service-oriented. It is not just like buying a physical product that you purchase to consume and then forget about it. A good insurance company should have good customer service as core to its business. Customers should be able to reach the company through different mode of communication such as through telephone, emails and online chats. However, while correspondences through emails and chats are good, they may not be as effective as telephone conversation. Communications via telephone is quick. It provides a platform whereby customers can easily get across to his insurance company and be sure of getting immediate response. One thing you need to watch out for when it comes to customer service is the response time. How quick is the insurance company able to response to your call? The best way to test the quality of customer service of any insurance company is by placing a call to the contact telephone numbers of the company to see how long it takes them to respond to you. You find out that some insurance companies have the attitude of directing calls to automatic telephone answering machine. You may spend between fifteen and twenty minutes waiting before a real human being will attend to you. This type of situation may be a signal that the insurance company doesn’t have enough hands to attend to the needs of their customers. It will also give you a clue of what to expect if you decide to buy your insurance policy from the company. In today economy, people do work round the clock. In the same manner, a good insurance company should be able to provide good customer service twenty four hours every day.
- Experience: Another critical area you need to look at when shopping for insurance company is the competence of the management of the company. The management and key staff of a good insurance company should possess necessary qualifications and skills. In addition, they should keep to on-going learning and development in order to stay up to date on policies and state regulations. You will agree with me that we live in the ever changing world. Insurance industry is without any exception. If you want to know whether an insurance company is good in this area, you can just visit the website of the company. Insurance companies with skilled management staff take pride in showcasing the profiles of its key staff on their website. Also, if you want to know how up-to-date on policies and state regulations an insurance company is; just check if the company maintain a blog. Good insurance companies usually update their blogs with relevant articles that will be useful to their clients. Having just a static website does not show that an insurance company is committed to on-going research and learning.
- Claims Processing: If I may ask you, why do you want to buy car insurance? The main reason people buy insurance is to enjoy protection from their insurance company in case anything goes wrong. For example, people insure their cars so that the insurance company will pay or reimburse the insured in case accident occurs which may cause damage thereby leading to personal liability. That is why it is important to choose an insurance company that you know will be there for you when you need them. I know you will not want to insure your car with an insurance company that will decline your claims when you are in need. Of course, it is understandable that insurance companies may not honour all claims. Notwithstanding, if a claim should be rejected, the reason should be justifiable. Unfortunately, there are some insurance companies that are known for the habit of not paying claims to their customers. A good insurance should not just pay valid claims; it should ensure that all claims are processed promptly. In fact, there are insurance companies that have gone as far as making sure that claims processing can be completed online without much hassle. You can use customers’ complaints as a yardstick to measure their satisfaction. Companies with low rate of complaints from customers will be a good one. You can get to know about customers’ comments and complaints from insurance comparison websites. You can also get useful information from friends and colleagues.
- Financial Stability. Although insurance industry is regulated, not all of them are good in managing their resources effectively. In an attempt to make much profit, some insurance companies do engage in investing their funds to the point that they have little left to pay out as claims. Some have gotten their fingers burnt in the process. There is likelihood that any insurance company that is not stable financially will not be able to pay claims made by its customers. Insurable events are unpredictable at times. If a company that is not financially stable get hit with many claims within a short range of time, it can mean the end of such company. If you want to know about the financial stability of any insurance company, you can look at its financial statements. Insurance companies are required to file annual and quarterly financial statements prepared in accordance with US statutory accounting principles as determined by the National Association of Insurance Commissioners (NAIC), subject to variations prescribed or permitted under state law. However, this will only be useful to someone who knows how to interpret financial statements. Another way to determine the financial stability of an insurance company is to check its rating from top rating companies like Standard and Poor’s and Moody’s Corporation.
- Honesty and Transparency: Despite the fact that the law specify that insurance companies should make adequate disclosures about the terms and conditions relating to their products and services, you will still find out that some of them still err in this area. It is not enough for insurance companies to state the terms and conditions of their policies; it is supposed to be legible enough for customers to be able to read. It is not a good practice for an insurance company to hide important information from its customers. Any company indulging in such practice with the aim of luring customers into buying what they wouldn’t have bought if they know about particular information is not customer centric. Before you buy any insurance policy from any insurer, it is important to ask questions and see how adequate they are in providing the answers. In order to avoid unpleasant surprises, you should read and understand the fine print.
- Reputation: This cannot be over-emphasized. It is important that you only buy your insurance from a licensed company. In US, insurance companies are regulated based on their licence status. Before any insurance company can lawfully transact insurance business in a state, it must be licensed in that state by the state insurance department. It is important that you transact business with licensed insurance company. It can be safer to deal with a company that has been around for a long time. Such company must have built a reputation for itself over the years. Also, it is easier for you to assess a company that has been around for a long time than a new company that is just entering the market. There is no certainty that a new company will be able to stand the test of time.
- Suitability: Insurance companies are not the same. Some only focus on a particular line of business such as car insurance. You need to ask yourself if such insurance company will be able to meet both your immediate and future needs. For instance, your present need may be just to buy car insurance policy. But what happens if you become a homeowner tomorrow? If you want to buy home or life insurance, it means that you will need to look for another insurance company that offers such service(s). Buying your insurance needs from different companies may make you lose some price discounts. In the insurance industry, one of the ways to save costs is by bundling your insurance. When you buy all your insurance from one company, you can qualify for discount and you will have power to negotiate better. Therefore, it is good that you consider your immediate and possible future insurance needs.
- Insurance Rate: After you have taken all the points mentioned above into consideration, you can now come to the issue of price. A company that offers the cheapest insurance quote may not necessarily be the best company. Instead of searching for the cheapest insurance rate, it is better to search for a good insurance company that will offer you good rate for the level of coverage you want to buy. One disadvantage of buying the cheapest insurance policy is that, it may not provide you adequate coverage.