When does it make a difference?
Common questions and answers
How does a carrier get rated anyway?
In most cases it is done by evaluation by an independent company. In almost all cases in the United States today this company is AM Best, Inc. They evaluate several factors, such as diversity of business, financial stability, size of current book of business, amount of surplus on hand, value of outstanding claims, etc. An “A” rating indicates the highest rating, with “B” next and then “C” and so on. There are also “+” and “-” ratings in between (such as A++ all the way down.)
Does a rating make a difference in premium cost?
The correct answer is “It depends”. In certain states the premium is fixed, so only secondary factors come in to effect. Those secondary factors can be affected by rating, or more accurately by the characteristics used to compile that rating. Experienced carriers with large amounts of surplus have more flexibility in offering different plans, which can include discounts, deductibles and credits.
What is the danger of going with an unrated carrier?
he most obvious danger is the possible lack of financial stability in the carrier. In the last few years several unrated carriers have gotten in to financial difficulties and been placed in custodianship with the state they reside in. In this case, coverage may be revoked or terminated without sufficient notice to procure new coverage.
to be continued …