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Auto Insurance Companies

There are a large number of auto insurance companies offering policies to consumers. The majority of auto insurers are generalists which offer a broad range of consumer insurance, with car insurance being just one product line. However, some auto insurers are specialists who concentrate predominantly or even exclusively on auto coverage. The largest insurers tend to offer auto insurance in all states, however due to different laws and licensing requirements in each state, some insurance companies restrict their car insurance offerings to specific states.

Largest Auto Insurance Companies

The top 10 auto insurance companies by direct premiums written in 2009 (before reinsurance transactions and excluding state funds) are1:

Rank Company Direct Premiums Written ($000) Market Share
1 State Farm Mutual $30,586,466 18.6%
2 Allstate Corp. $17,249,325 10.5%
3 Berkshire Hathaway Inc.
(Parent company of GEICO)
$13,481,538 8.2%
4 Progressive Corp. $12,257,769 7.5%
5 Zurich Financial Services Ltd
(Parent company of Farmers Insurance Group)
$10,442,100 6.4%
6 Nationwide Mutual Group $7,392,863 4.5%
7 Liberty Mutual Holding Co. $7,160,608 4.4%
8 USAA Insurance Group $6,747,371 4.1%
9 Travelers Companies $3,364,166 2.1%
10 American Family Mutual Insurance Co. $3,308,437 2.0%

Note that these 10 companies only make up 68.3% of the market, and there are a number of other good insurance companies out there offering competitive rates.

Insurer Financial Strength Ratings

After you’ve received your quotes, and before you buy any insurance policy, you should check the financial stability of your preferred insurance company. There’s no point paying for a policy if the insurance company does not have the financial strength to meet its claims obligations. Fortunately, there are a number of independent rating agencies that provide financial strength ratings for insurers. The four main rating agencies are A.M. Best, Fitch Ratings, Moody’s Investors Service, Standard & Poor’s.

Not all of the rating agencies provide ratings for all companies, and each agency has its own rating scale and standards. Ideally, when researching an insurance company, you should obtain the ratings from at least two of the agencies. Don’t simply rely on the rating the insurance company advertises, as it has probably just picked the best rating. You want a balanced view in order to make a good evaluation. Ratings can change over time, so be sure to get the most current ratings, and don’t forget to check them again when it’s time to renew your policy. As was seen in the 2008/9 financial crisis, financial stability and corresponding ratings can change rapidly and dramatically in periods of uncertainty.

Below are the ratings scales used by each of the four main agencies:

A.M. Best

Secure Vulnerable
A++ Superior B Fair
A+ Superior B- Fair
A Excellent C++ Marginal
A- Excellent C+ Marginal
B++ Good C Weak
B+ Good C- Weak
    D Poor
    E Under Regulatory Supervision
    F In Liquidation
    S Suspended

Fitch Ratings

Secure Vulnerable
AAA Exceptionally Strong BB+ Moderately Weak
AA+ Very Strong BB Moderately Weak
AA Very Strong BB- Moderately Weak
AA- Very Strong B+ Weak
A+ Strong B Weak
A Strong B- Weak
A- Strong CCC Very Weak
BBB+ Good CC Extremely Weak
BBB Good C Distressed
BBB- Good    

Moody’s Investors Service

Secure Vulnerable
Aaa Exceptional Ba1 Questionable
Aa1 Excellent Ba2 Questionable
Aa2 Excellent Ba3 Questionable
Aa3 Excellent B1 Poor
A1 Good B2 Poor
A2 Good B3 Poor
A3 Good Caa1 Very Poor
Baa1 Adequate Caa2 Very Poor
Baa2 Adequate Caa3 Very Poor
Baa3 Adequate Ca Extremely Poor
    C Extremely Poor

Standard & Poor’s

Secure Vulnerable
AAA Extremely Strong BB+ Marginal
AA+ Very Strong BB Marginal
AA Very Strong BB- Marginal
AA- Very Strong B+ Weak
A+ Strong B Weak
A Strong B- Weak
A- Strong CCC+ Very Weak
BBB+ Good CCC Very Weak
BBB Good CCC- Very Weak
BBB- Good CC Extremely Weak
 
  1. Source: SNL Financial LC