McKenzie, who’s looking for Denver renters insurance, wrote in to ask,
Who rates renters insurance companies? What are the factors? Does it matter which rating system they use? Should I be aware of anything when I’m comparing the companies? I’m pretty confused because they all look fairly similar.
That’s a great question McKenzie and objectively, they should all look similar. Why? Let’s find out!
Who Rates Renters Insurance Companies?
Did you ever wonder how stable your renters insurance company is? Who makes that determination? Who rates insurance companies to make sure they can pay claims?
Who Rates Renters Insurance Companies?
One of the largest arbiters of financial strength in renters insurance companies is A.M. Best. We mentioned them in our post on how to choose a renters insurance company. A.M. Best looks at the financials of renters insurance companies, as well as other kinds of insurance companies and gives them a grade based on that. So why are they all graded in a fairly similar way? Because you don’t want renters insurance that won’t be there tomorrow. Every company you work with should be highly rated by A.M. Best. Ratings includes things like how large the capital reserves of the company are, whether or not they took an underwriting loss in the last quarter or year, what Wall Street thinks of their stock if applicable, and much more. If you saw a “C” rated company in a sea of “A” rated companies, wouldn’t you think twice about doing business with them? “C” certainly doesn’t mean destined to fail, but why buy insurance from someone who isn’t quite as financially strong as some of the other options?
Who Rates Renters Insurance Companies? You Do!
Who Rates Renters Insurance Companies?
What does that even mean? Well, due diligence is crucial when you’re buying renters insurance. Financial ratings give you a good overall picture of how strong the company is, but they don’t tell you much about the experience of working with the company, or how they pay claims. Take a look at some of the things said about Geico renters insurance, underwritten by another company. Though they’re “A” rated, that doesn’t necessarily mean you’ll have a good overall experience, or that they’ll stand behind you when you need it.
That’s why you need to rate renters insurance companies on your own. Complete the due diligence, and make sure you understand what you’re buying before you buy it. It’s also important that your rating renters insurance companies includes making sure you have replacement cost on your personal property coverage.
Ideally, you’ll work with a company like Effective Coverage, who knows which writing company is best to place any individual with, and who offers the level of service and coverage that you expect. For more information on who rates renters insurance companies and why you should be the one rating them, call Effective Coverage at (800)892-4308.