Auto Insurance Review Methodology

Introduction

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

Premiums can also vary drastically from company to company, but you won’t know until you check. There are other factors to consider among providers as well, including third-party ratings 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 shopping for car insurance a difficult task. To help solve that problem, we’ve compared more than two dozen of the top auto insurance providers based on the most important factors.

Our review process

To ensure objectivity and a comprehensive review of each auto insurance provider, we reviewed 25 different companies and assigned each one a rating within the following categories:

  • Availability
  • cost
  • customer satisfaction

Within each category, we assign a rating for each company and add them together to establish an overall zero to five star composite rating for each auto insurance provider. Below you will find the factors we considered within each category and how much weight each was given.

Data collection

To ensure that every car insurance review we compile uses the most up-to-date factual information possible, we collect data from a variety of official sources that report on car insurance companies. For example, we collect consumer complaint data from the National Association of Insurance Commissioners (NAIC), which is “the U.S. standards-setting and regulatory support organization dedicated to serving the nation’s state insurance regulators.

We also compare auto insurance companies in terms of their customer service and claims processes, which are independently rated by JD Power and Associates. Separately, we look at Consumer Reports survey scores.

We scan company websites to gather accurate information about auto insurance policies, extra features, and discounts. We also rely on third-party data from Quadrant, which we use to account for regional and state differences in premiums, differences in pricing methodology, and premium costs.

Availability

One of the first factors we compared among auto insurance providers was availability, or the likelihood that a person would be eligible to purchase an auto insurance policy from a given 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 broad access across the country, we make sure that our car insurance reviews are useful to as many people as possible.

States available

Some auto insurance providers offer policies nationwide, while others only extend coverage in select states. Because of this factor, we gave preference to providers that offer extensive coverage nationwide. We assign each company a score from zero to one that reflects its availability based on the geographic regions it serves.

Other factors

Other factors are more difficult to qualify but just as important. For example, the auto insurance offered through USAA is indisputably high quality, but you must be a member of the military or have an eligible membership to qualify. Similarly, certain auto insurance policies offered through The Hartford are only available to AARP members age 50 and older.

In general, the companies with the widest availability received a more favorable rating than others in our reviews.

cost

While cost isn’t the only consideration when shopping for auto insurance, the price you pay for premiums is important. In general, consumers should strive to pay the lowest possible cost for the amount of coverage they need. In addition, they must ensure that they do not pay more than they should without receiving something tangible in return.

Ultimately, we evaluated four individual aspects of pricing and rated each company on a scale of zero to one on each.

Median Annual Premiums

Using third-party data from Quadrant, we compared median annual premiums, as well as regional and state differences in premiums. We calculate a score from zero to one for each company, based on how their premiums compare to those of the competition. To adjust for regional differences, we first scored the premiums by state and then averaged the individual scores to derive the overall premium score.

While median annual premiums don’t necessarily represent what consumers will pay for their own insurance policies, they do help us measure affordability on a standard scale. That said, consumers should shop around and shop around for auto insurance policies, as many individual factors can cause them to pay more or less for their own coverage.

Fee cost

Using the same data set, we compared the cost of paying car insurance premiums in installments versus paying six months of premiums up front. Ultimately, auto insurance providers with the highest discounts for payment in full scored highest in this category, and those with no installment surcharge scored highest.

This metric is important as premiums can appear higher than they really are when you add in installment charges. On the contrary, companies that offer discounts for paying for a policy in advance may be more affordable than they seem.

Accident rate

We also look at the loss ratio for each auto insurance company. A loss ratio is a measure used to describe an insurance company’s expenses compared to its profits. It is calculated by adding a company’s paid insurance claims to its adjustment expenses, then dividing that number by the total premiums earned, and then multiplying by 100. Generally speaking, the higher the loss ratio, the more efficient the company will be. to provide value to its customers. per dollar of premiums collected.

For example, a business that earns $200 in premiums and loses $100 of those funds to claims and administration would have a 50% loss ratio.

We rate auto insurance companies from zero to one based on their loss ratios, with higher loss ratios generating higher scores. We take into account loss ratios among auto insurance providers in a three-year average from 2017 to 2019, using information from NAIC Market Share Reports.

Pricing methodology

We also analyze the pricing methodology of each company. This factor was examined to determine how much determining factors influence premiums versus how much other factors influence premiums.

The driving factors we analyzed consisted of mileage, age and driving history; the nondetermining factors we considered were home ownership, education level, marital status, gender, credit, and no-fault driving history. Because this factor compares driving factors to non-driving factors, it also takes into account auto insurance discounts.

In general, companies that gave more weight to driving factors scored higher than those that calculated premiums with more weight given to non-driving factors.

customer satisfaction

Customer satisfaction is crucial to consider when shopping for auto insurance. After all, you will become intimately familiar with your provider’s processes if you are forced to file a claim, especially a complicated or expensive one.

To help consumers evaluate auto insurance companies based on their customer satisfaction ratings, we use third-party reports from three independent agencies.

Consumer Report Ratings

Consumer Reports is a nonprofit member organization that “works with consumers for truth, transparency, and fairness in the marketplace.”

With that in mind, we compare auto insurance companies based on their Consumer Reports ratings, which assess customer satisfaction with premiums, claims, and service. The companies received a rating from zero to one.

J.D. Power Scores

We looked at how individual auto insurance companies scored in relevant JD Power consumer satisfaction studies from 2019 to 2021. Specifically, we compared providers based on their ranking in JD Power US Auto Insurance Study, US Auto Claim Satisfaction Studyand US Insurance Buying Study.

Companies that repeatedly scored higher in these studies were given preference in our own rating system, which scored each company from zero to one in this category.

NAIC Complaint Scores

Finally, we compare auto insurance company consumer complaint scores compiled by the National Association of Insurance Commissioners (NAIC). Evaluating consumer complaints when shopping for auto insurance is important, as they represent past customer experiences. The NAIC rates insurance companies using an average ratio of 1.00; companies that score lower than that have a lower than average number of complaints, and vice versa.

To rate companies in this category on a scale of zero to one, we looked at three years of data (2018, 2019, and 2020). We look at auto insurance providers, as well as their subsidiary companies, and subsidiary companies weighted based on 2020 annual premium amounts.

Not surprisingly, auto insurance providers with fewer consumer complaints score higher in this category, while those with more consumer complaints score lower.