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Is Your Insurance Company Financially Secure?

Updated on August 1, 2016
Fun is like life insurance; the older you get, the more it costs. - Kin Hubbard
Fun is like life insurance; the older you get, the more it costs. - Kin Hubbard | Source
Love is the only kind of fire which is never covered by insurance.
Love is the only kind of fire which is never covered by insurance. | Source

There’s no doubt that buying insurance for your precious belongings is a wise thing to do. This is because by making small payments to an insurance company you’re transferring your personal risk to that insurance company. That sounds good, right? But the question is; how do you know if the insurance company you partner with will be able to pay you your claim? Go on and read on how to identify a reliable and strong insurance company.

You probably just made up your mind to insure your precious car, house or any of your valuable properties, but you are at a loss on how to identify the correct, genuine and reliable insurance company for this purpose. Well, that’s not surprising, especially considering the rising cases of insurance fraud. Insurance as we all know is an arrangement with a company, in which you pay the company regular but small amounts of money, with the agreement that they should pay the cost for any nasty and unfortunate event that ever happens to you or your property. The nasty events I mean here ranges from accidents, ill-health, theft, natural calamities and even death.

Hence, by making these small payments to an insurance company, you’re unarguably transferring your own personal risk to the Insurance Company. Sounds cool right? Of course, that’s the main advantage of buying insurance for your properties and to be candid, you really need this as a person. Unfortunately, many people see the month to month payment to the insurance company as just flushing money down the drain. Even though you may never have to make claim on your insurance, there is always a very good reason to believe that your claim is always there for you. The truth remains that insurance is for your protection as a person and that of your investment. It’ll always be safe for you to know that insurance is the grease that lubricates the engine of an enterprise.

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Financial Status of Chosen Insurance

Now, inasmuch as insurance is a necessity for you as an individual, it’s also very imperative for you to be on your guard against incompetent and fraudulent insurance companies.

  • One important factor you have to find out about your prospective Insurance Company is its financial status.
  • Is your prospective insurance company financially secure? I must admit that it’s really pretty hard to know for sure if an insurance company will still be operational in years to come but the fact remains that for you to be on the safe side, you must know the financial capability your insurance company. How?

Best Life Insurance Companies


First and foremost, you have to start by carrying out research into the company in question. One of the most convenient ways of doing this is by reviewing the financial ratings of the Insurance Company in question. Normally, the financial rating of Insurance Company ranges from ‘A++’ down to ‘F’. The financially strong Insurance Companies are the ones that have ratings of A and B. Those that are no longer rated are labeled ‘S’. To check the financial rating of an insurance company, you have to log on to your state’s department of insurance website.

Now, after knowing the financial status of your Insurance Company, the next step will be for you to remain updated on current news about both your Insurance Company and the Insurance Industry generally. Yeah, you have to bear it in mind that even global problems affecting insurance can have a direct or indirect effect on the financial status of your own company. For you to be current, you have to regularly read news on insurance, as well as conduct internet searches with the name of your insurance company in conjunction with some related key phrases. This will definitely give you rich information on how your own insurance company is faring out there.

Another way of getting reliable information about the financial status of your Insurance Company is by contacting your state’s department of insurance. You can get useful information on your state’s guarantee funds for insurance policies from that department. In case you aren’t aware, the guarantee fund is money set aside to pay out on insurance claims if it happens that your own insurance company can no longer pay you due to a financial slump. In addition to this, your state’s department of insurance also reveals the right you have as a client of an Insurance Company.

Top 10 Car Insurance Companies

Liberty Mutual
State Farm
21st Century Insurance
American Family
Source: The Top Tens

It’s also possible for you to deduce the financial strength of your Insurance Company by doing the following:

  • Studying the trends of the worth of your Insurance Company in the stock market. You can obtain this information by looking up the stock prices for your Insurance Company at the online brokerage website or any other available online platform.
  • Now, for you deduce the financial health of your Insurance Company, you have to check the trend in stock price of the Insurance Company for a period of time. If the trend is continuously downward, then all is not well, even if the financial rating is okay.
  • It’s also very possible for your Insurance Company to be financially healthy, yet unable to easily and readily pay your claim when the need arises. For you to be absolutely sure if your Insurance Company is financially healthy and able to pay you your claims when you need it, you have to look beyond the financial aspect of the company.
  • For Instance, you can use state agency websites to view all metrics, not just financial metrics, to determine the likelihood of a proper payout in the event of a claim.
  • Also taking a look at the general running of the company can give you some hints on the stability of the company.

- Are there too many complaints listed for the insurance company?

-Is the Company involved in regular court cases?

-As a client, do they pay out your claims promptly?

-Does your Insurance Company offer the best rate?

-Are you happy with the general customer services they give?

Studying all these will go a long way in determining if your Insurance Company is really financially secure.

So when shopping around for insurance, don’t bite right away on what appears to be a pretty good deal. Do a bit of research and check them thoroughly as advised in this article. Fortunately, choosing an Insurance Company is never a permanent commitment. You can easily dump weak Insurance Company for stronger ones. So the choice is yours.

2011 Moira G Gallaga©


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