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Insurance is always in the background of our lives, and it's easy to forget until we need it. Some insurance products, like auto, are required by the state. Others, such as pet and travel, are entirely optional. But a plan fitting your needs could save you thousands of dollars in an emergency with affordable monthly premiums.
Personal Finance Insider asks what it takes to balance cost and benefit. To assess insurance companies, we go beyond customer satisfaction and online reviews and delve deep into the coverage, customer service, company mantras, and other factors creating positive consumer experiences.
Comprehensive Ratings
We rate all categories on a scale of 1-5. Things like customer service and monthly premiums may be more evident to the average consumer. But we consider other factors in our ratings to be just as crucial in finding insurance that performs when you need it most.
Each category gets unique ratings combined to get one average for each product. Some rating categories only apply to specific product types. However, we consider customer satisfaction and financial stability across the board. We also assign extra points when we find proof of ethical practices with no significant controversies or known misdeeds within the past five years.
Read on to see how we rate insurance products to give every reader the most objective ratings and comparisons.
Is There A Perfect Insurance Company?
Insurance is a game of risk with tradeoffs. Lower premiums could mean less employee training and fewer agents to support you when you file a claim or adjust your plan. It might also suggest lower death benefits and more restrictive underwriting. Coverage for a broader range of insured parties might lead to higher premiums and insurance agents who aren't familiar with the life insurance product you want. High customer service ratings could lead to lower financial stability if the company earns those ratings by giving customers whatever they want. Ultimately, lower financial stability could put you at risk of not getting your claims paid later, as the company could shut down.
We have reviewed a lot of excellent insurance companies striking a balance to serve customers better. These include both general providers and those offering specialty coverage. We evaluate all insurance types on a few fundamental bases.
Car Insurance
Car insurance is required in most states. It's also one of several options to establish "financial responsibility" in states that don't technically require auto insurance. Of course, nobody would ever need auto insurance in an ideal world. But in reality, a good auto insurance plan makes policyholders whole after an accident while simultaneously protecting insured parties from liability should they cause an accident. Here are the rating factors we use specifically for car insurance.
Policy Types (Weighted 20%)
Many top-performing insurance companies also use restrictive underwriting. In this context, an auto insurance company may offer coverage solely to drivers with a clean driving record and minimal risk factors. Companies using restrictive underwriting and dropping insured drivers over one ticket or accident receive a one-star rating for policy types. Companies covering a more diverse range of drivers (foreign nationals, families with teen drivers, etc.) earn a five-star rating on this metric.
Average Premiums (Weighted 10%)
Which companies offer the lowest premiums for the same basic coverage? We're not looking for companies cutting coverage to give you an artificially low price. Instead, we compare quotes with comprehensive, collision, PIP, and liability coverages. The most affordable companies receive a five-star rating in this section. One star would mean the company charges more than the industry standard without something to justify the higher costs.
Claims Paid (Weighted 15%)
Modern car insurance companies typically offer online claims and policy management. Many nationwide carriers also have apps, phone support, and more. We use trusted online resources to compare average claims handling times between car insurance providers. High ratings go to companies offering web-based, mobile, and other resources with fast claims-processing times.
Standard Exclusions (Weighted 15%)
Every insurance company has to mitigate risk to stay in business. Our standard exclusions rating operates independently of affordability. So if a company covers drivers with a history of DUIs, but its premiums skyrocket, we still consider it as coverage offered. Five-star companies in this area offer coverage to a wide swath of age groups, families, driving histories, and more. One-star companies only cater to specific groups (i.e., military, teachers, medical workers, etc.).
Agents (Weighted 10%)
Modern drivers continue to see innovations in technology across the board. The agents who help you with insurance are no different. Some customers prefer to go into an office or get on the phone with a live agent. Others prefer to get a quote online without talking to an insurance agent. We assign five-star ratings in this area to companies with options to purchase policies online or through broker agents who can run multiple quotes to find a good fit for the individual driver. Low ratings go to companies with no online quoting, only selling policies through agents who work specifically for the company.
Life Insurance
One party purchases a traditional life insurance policy while another party eventually files a claim. Over the years, life insurance has evolved with options for multi-million dollar retirement vehicles and more. Unlike other types of insurance, if you wait too long, you could lose your chance to buy a life insurance policy. Life insurance premiums also rise every year you delay. Whatever your life insurance goals are, finding the right plan the first time is crucial. The additional factors we consider when rating life insurance products include the following:
Policy Types (Weighted 20%)
Most people have heard of term and whole life insurance. We also look for universal life insurance, no medical exam policies, and more. Some providers now offer policies for HIV patients, people with a history of cancer, and other preexisting conditions as long as the applicants meet set requirements. Companies providing various products for diverse applicants get our five-star rating. Companies only offering term or no medical exam policies with limits under $25,000 get one star in this area.
Average Premiums (Weighted 10%)
Holding all factors equal, we compare premiums between life insurance companies. More affordable companies receive a five-star rating. Companies with higher premiums only selling plans with more features fall in the middle. Our one-star rating is used for companies only offering life insurance plans with low benefits and high monthly premiums for the expected benefit.
Waiting Periods (Weighted 10%)
Many life insurance companies institute a waiting period for the payment of benefits. If you buy a $1 million life insurance policy and die within the first year, an insurer may only pay part of $1 million. Instead, it might repay the premiums you already paid. Some companies add an extra 10-20% in returns. We've seen companies waive waiting periods on some plans. Some life insurers use multi-year waiting periods. Higher ratings go to companies with fewer barriers to policy usage.
Standard Exclusions (Weighted 15%)
Life insurance customers may be familiar with the concept of preexisting conditions that would keep them from getting coverage. However, recent medical innovations have made conditions like HIV more manageable (and, by extension, less deadly) than ever before. As a result, most life insurers will take the conservative road in these matters. So our highest ratings in this arena go to life insurance companies ready to make the leap and offer coverage for previously high-risk groups, including seniors.
Agent Training (Weighted 15%)
The life insurance industry has an ongoing stream of new agents trying to sell as many policies as possible. An untrained life insurance agent might think they're doing a buyer a favor by recommending lower monthly premiums with any term policy, even unknowingly dispensing inaccurate information about how term policies work. A top-ranking life insurance company in this area sends all agents through an extensive training process to understand its policies front and back. High-ranking companies have agents who can make helpful recommendations and answer any buyers' questions.
Homeowners Insurance
Homeowners insurance protects homeowners in obvious areas (personal property and the home's structure). It also offers liability protection if someone gets hurt on your property or hotel costs should you be displaced from your home for a short period. Choosing your homeowners insurance policy carefully up front could mean avoiding long waiting times, denied claims, and other complications later on. The additional factors we consider when rating homeowners insurance products include:
Policy Types (Weighted 20%)
Homeowners insurance companies offer products for single-family residences, condos, homes under construction, and more. In some states, most homeowners policies exclude hurricanes, tornadoes, earthquakes, etc. As a result, mortgage companies may require homeowners to buy separate policies to fill those gaps.
Average Premiums (Weighted 10%)
You might expect large national companies like GEICO, Progressive, and Allstate to offer lower rates. However, you might be surprised how low rates can be with a smaller state-specific provider for homes in good shape with no history of claims or other issues. We consider average premiums for all covered populations. A homeowners insurance company with five stars will provide low rates based on the coverage offered. One-star insurance companies charge more without justification (such as covering high-risk areas like beachfront properties and certain lava zones).
Claims Paid (Weighted 15%)
Our five-star ratings go to homeowners insurance companies with various claims options. Insured parties can file claims online, with an insurance agent, or over the phone. According to customer reviews, claims are processed quickly, and the BBB has minimal complaints about claims. One star goes to companies with extreme complaints about unpaid claims.
Standard Exclusions (Weighted 15%)
Each insurance company takes on certain risks balanced against its premiums and profits. While no homeowners insurance company can cover everything, many companies partner with other insurers. For example, the primary insurer may provide homeowners insurance while quoting hurricane or earthquake coverage with a trusted partner. We're looking for providers that make insurance shopping as simple as possible for consumers.
Agents (Weighted 10%)
The top homeowners insurance companies in this category offer quoting online, through licensed insurance agents, and over the phone. We look for companies that come to potential customers. The personalized option of an insurance agent coupled with online and other options is essential for a premium insurer.
Renters Insurance
Renters insurance offers considerable value for your money, but many renters know they need it. Expressly, these renters assume homeowners insurance will cover their claims too. Unfortunately, it doesn't work that way. A homeowners policy covers the building, personal property, liability, and other demands of the homeowner. If the owner has renters, renters insurance provides the same coverages besides the building if losses are associated with the renter. The additional factors we consider when rating renters insurance products include:
Average Premiums (Weighted 25%)
Renters insurance works differently than other insurance types. Premiums are generally around $200 annually. However, pricing can vary for specific riders to enhance coverage. For example, if you rent in a particular apartment building, the management may require you to buy renters insurance. Some of these apartments have contracts with renters insurance providers for lower rates. But renters need to live in specific buildings to qualify.
Claims Paid (Weighted 25%)
Renters insurance can cover personal belongings, as you might expect. It also covers the cost of your hotel room if you're temporarily displaced due to flood, fire, etc. While claims are generally small, premiums paid are small. So a financially unstable insurer may be slow to pay claims. We look for companies processing and paying claims efficiently. Frequent denials or underpayments reported by customers would constitute a one-star rating for claims paid.
Agents (Weighted 20%)
The most common way to buy renters insurance is online. Many renters run a quote through their auto insurance company and enjoy multi-policy discounts. Our five-star ratings in this area go to companies offering online, agent, and other options tailored to diverse buyers.
Travel Insurance
Travel insurance can save you a lot of headaches whether you travel once a year or every chance you get. A strong policy will cover lost baggage, plane tickets, and more. One of the critical things to understand about travel insurance is the timing and reason behind your claim matter. This is why many companies offer a CFAR (cancel for any reason) rider to make the lines a little more flexible. When rating travel insurance companies, we consider the following in addition to our previously mentioned criteria for insurance in general:
Policy Types
Airlines offer limited travel insurance to cover the cost of your ticket if you have to cancel unexpectedly. When you buy your travel insurance from specialized companies, medical coverage, lost luggage, rental car protection, and many other coverages may be available. We assign higher ratings to companies offering domestic and international coverage, additional coverage for pets traveling with you, roadside service, etc.
Average Premiums
Premiums vary based on coverage, travel destination, and policy type. We use a combination of customer reviews and company quotes to see how competitors stack up. If a company offers the same coverage with lower premiums, it gets a higher rating.
Claims Paid
One of the biggest problems travel insurance customers encounter is the claims process. If it's long and drawn out or the company fails to pay, it creates a negative experience. Unfortunately, these experiences can be missed in the sea of reviews saying, "I never had to use my travel insurance, but the peace of mind was great." High ratings mean we identified a company that pays its claims promptly.
Pet Insurance
Pet insurance is among the cheapest insurance products with restrictions on preexisting conditions. But a good pet insurance policy could save a pet owner thousands of dollars in an emergency. In addition, it could save a beloved pet's life by making medical care financially accessible. Some companies only offer pet insurance, while others are part of a larger company like Nationwide. Many pet insurance agents and companies describe it as a labor of love. We use the factors below to help pet parents find pet insurance meeting their needs.
Policy Types
Pet insurance is similar to human health insurance in that you have options. You can lower your monthly premiums if you want basic accident coverage, but policies will not cover many severe illnesses. Even seemingly normal conditions can get expensive quickly. We look for pet insurance providers with accident-only, comprehensive accident and illness policies, and wellness riders to balance out pet health costs. Companies with one star in this area only offer wellness or accident-only coverage.
Average Premiums
Pet insurance premiums can be as low as $10 monthly with discount pet insurance companies. These are typically accident-only plans to cover auto accidents, falls, etc. We factor in both price and what you're buying. For example, a company with comprehensive pet insurance plans for a 3-year-old dog with no preexisting conditions with a $30-$50 monthly premium will score higher than a company charging $30-$50 for an accident-only plan for the same dog.
Claims Paid
Excellent pet insurance companies offer online and app-based claims processes. If you need help, you can also call a toll-free hotline to file claims over the phone. In addition, some pet insurance companies streamline the process by guiding you through a step-by-step process to ensure you submit itemized invoices for payment in as little as 1-2 business days. Pet insurance companies honoring claims quickly and in line with the policies sold earn five stars.
Preexisting Conditions
The average pet parent may see exclusions for preexisting conditions and assume a universal definition. In practice, every pet insurance company has a different explanation. Some companies separate "curable" and "noncurable" conditions. If your pet is asymptomatic for 12 months with a "curable" illness, you may qualify for coverage for that condition. Others exclude known conditions for the entirety of your pet's life. We also factor in any waiting periods on coverage for joint conditions, hereditary conditions, etc.
Age Exclusions
Some companies only offer coverage once a pet reaches a certain age (generally eight weeks for cats and dogs). Age limits for senior pets are more common. Some companies stop accepting pets altogether at a certain age. Others take senior pets but with no coverage for joint, hereditary, or other specific conditions. Pet insurance providers with five stars in this area accept pets of all ages without additional restrictions.