Methodology for reviewing car insurance

Introduction

Car insurance premiums may seem like just another bill to pay, but the company you choose can drastically affect your overall satisfaction. The fact is that some car insurance providers are known for faster and more reliable claims processing, as well as better customer service in general.

Premiums can also vary dramatically from company to company, but you won’t find out until you check. There are other factors to consider among suppliers, including third-party rankings and average consumer complaints.

Although car insurance companies tend to be transparent when it comes to their coverage options, the sheer number of companies and factors to consider can make car insurance shopping a difficult feat. To help solve this problem, we’ve compared more than two dozen leading car insurance providers based on the factors that matter most.

Our review process

To ensure objectivity and thorough scrutiny of each car insurance provider, we reviewed 25 different companies and assigned each of them a rating in the following categories:

  • Availability
  • Expenses
  • Customer satisfaction

Within each category, we assigned a rating to each company and summed them to establish an overall composite rating of zero to five stars for each car insurance provider. Below you will find the factors we have considered in each category and how much weight is given to each.

Data collection

To ensure that each of our car insurance reviews used the most up-to-date factual information possible, we collected data from various official sources that report on car insurance companies. For example, we collected consumer complaints from the National Association of Insurance Commissioners (NAIC), the U.S. standard-setting and regulatory support organization dedicated to serving national state insurance regulators.

We also compared car insurance companies in terms of their customer service and claim processes, which were assessed independently by JD Power and Associates. We reviewed the results of the Consumer Reports survey separately.

We searched the companies’ websites to gather accurate information about car insurance policies, added features and discounts. In addition, we relied on Quadrant third-party data, which we used to account for regional and national differences in premiums, differences in pricing methodology and contribution costs.

Availability

One of the first factors we compared among car insurance providers was availability – or the likelihood that each person would qualify to purchase a car insurance policy from any company.

This factor is important as consumers may not have access to the best car insurance policies due to factors beyond their control. By focusing primarily on car insurance providers that offer wide access across the country, we ensure that our car insurance reviews are useful to as many people as possible.

Available conditions

Some car insurance providers offer policies nationwide, while others extend coverage to select states only. For this factor, we have given preference to suppliers that offer wide coverage throughout the country. We assigned each company a score from zero to one, which reflects its availability based on the geographic regions it serves.

Other factors

Other factors are more difficult to note, but just as important. For example, car insurance offered through the USAA is undeniably high quality, but you must be a military member or have the appropriate affiliation to qualify. Similarly, some car insurance policies offered through The Hartford are only available to AARP members aged 50 and over.

Overall, the companies with the widest availability were rated more favorably than others in our reviews.

Expenses

Although price is not the only consideration to consider when shopping for car insurance, the price you pay for premiums is important. In general, consumers should strive to pay the lowest possible price for the amount of coverage they need. In addition, they need to make sure that they do not pay more than they should, without receiving anything tangible in return.

In the end, we evaluated four separate aspects of pricing and evaluated each company on a scale from zero to one for each.

Average annual premiums

Using Quadrant third-party data, we compared average annual premiums as well as regional and national differences between premiums. We calculated a score from zero to one for each company, based on how its premiums compare to the competition. To correct regional disparities, we first calculated premiums by country and then calculated the averages of individual scores to derive the overall premium score.

While average annual premiums do not necessarily represent what consumers will pay for their own insurance policies, they help us measure affordability on a standard scale. That said, consumers need to shop and compare the prices of car insurance policies, as many individual factors can make them pay more or less for their own coverage.

Price of installments

Using the same data set, we compared the cost of paying car insurance premiums with the payment of six-month advance premiums. After all, car insurance providers with higher discounts on full payment have a higher score in this category, and those without a premium on premiums have the highest score.

This indicator is important because premiums may seem higher than they actually are when installment fees are added. Conversely, companies that offer discounts on policy payments in advance may be more affordable than they seem at first glance.

Loss factor

We also looked at the loss ratio of each car insurance company. The loss ratio is a measure used to describe the insurance company’s costs compared to its profits. It is calculated by adding the company’s insurance claims paid to its adjustment costs, then dividing this figure by the total premiums earned and then multiplying by 100. Generally speaking, the higher the loss ratio, the more -The company is effective in providing value to its customers per dollar of collected premiums.

For example, a company that pays $ 200 in premiums and loses $ 100 in these funds due to lawsuits and administration will have a 50% loss ratio.

We rated car insurance companies from zero to one based on their loss ratios, with higher loss ratios generating higher results. We took into account the loss ratios among car insurance providers for an average of three years from 2017 to 2019, using information from NAIC market share reports.

Pricing methodology

We also looked at the pricing methodology of each company. This factor was investigated to determine how many driving factors affect premiums compared to how many other factors affect premiums.

The driving factors we looked at consist of mileage, age and driving record; the non-driving factors we looked at were home ownership, education level, marital status, gender, credit and no-fault driving record. As this factor compares driving factors with non-driving factors, it also takes into account discounts for car insurance.

In general, companies that give more weight to driving factors get a higher score than those that calculate bonuses with more weight given to non-driving factors.

Customer satisfaction

Customer satisfaction is crucial when shopping for car insurance. Ultimately, you will learn more about your provider’s processes if you are forced to file a claim, especially complex or expensive.

To help consumers judge car insurance companies based on their customer satisfaction ratings, we used third-party reports from three separate agencies.

Ratings of consumer reports

Consumer Reports is a non-profit member organization that “works side by side with consumers for truth, transparency and fairness in the market.”

With this in mind, we compared car insurance companies based on their estimates in Consumer Reports, which weighs customer satisfaction when it comes to premiums, claims and service. The companies received a rating from zero to one.

JD Power Score

We looked at how individual car insurance companies performed in the relevant JD Power customer satisfaction surveys from 2019 to 2021. In particular, we compared suppliers based on how they ranked in the JD Power car insurance survey in the United States. , the U.S. Car Claims Satisfaction Survey, and the U.S. Insurance Purchase Survey.

The companies that repeatedly scored higher in these surveys received a preference in our own rating system, which rated each company from zero to one in this category.

Results of complaints from NAIC

Finally, we compared the results of complaints from consumers of car insurance companies, compiled by the National Association of Insurance Commissioners (NAIC). Consumer complaints are important for judgment when buying car insurance, as they represent the experience of previous customers. NAIC rates insurance companies using an average index of 1.00; companies that have a lower score than this have a lower than average number of complaints and vice versa.

To evaluate the companies in this category on a scale from zero to one, we looked at data for three years (2019, 2020 and 2021). We looked at car insurance providers as well as their subsidiaries, and weighed the subsidiaries based on the annual premium amounts.

Not surprisingly, car insurance providers with fewer consumer complaints scored higher in this category, while those with more consumer complaints scored poorly.

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