Car insurance company ratings

I recently stumbled across a website called Valchoice.com which analyzes different auto insurance companies and helps you pick the right company based on how they pay out their claims and value their customers. The owner of the company, Dan Karr apparently sustained a very serious car crash and was in ICU for many days. Mr. Karr had nearly $100,000 in medical bills and spent years in physical therapy trying to recover from this serious car crash. Because of his experience in fighting with the insurance company to pay his large medical bills, he unselfishly developed this website to help consumers choose the right insurance company based on price, protection and how they pay out claims (with difficulty or easily).

There is a constant debate as to whether consumers should buy insurance from a company that has to pay back shareholders who invest in the company or who only have to please their policyholders. At first glance, I would assume that those insurers who have to please their shareholders have a built in conflict of interest. How can a company properly pay your claim, if you incur medical bills or property damage, when it has to make sure it pleases its shareholders and returns a profit to its shareholders? To me, that is a conflict of interest and insurers should concentrate on its policy holders who dutifully pay their premiums each month to be treated fairly when it comes to the claim process.

Val Choice conducted a study of more than 300 auto insurance companies and their histories of paying claims. There are basically two different types of auto insurance companies: those that are publicly traded companies which must please their shareholders and policy holders and those that are called “mutual companies” which do not have to serve two masters, they only have to serve their policy holders. The Val Choice study found that the mutual insurance companies provided the best value to its customers (these were companies owned by their policyholders and paid dividends to its policyholders). Val Choice found that from 2011 to 2015, the mutual insurance companies paid out 72.6 percent of their premiums to claims while the publicly held companies with shareholders to please, only paid out 62.8 percent of their premiums in claims. Thus, the publicly held companies put their shareholders profit in front of their policy holders best interests.

Based on this study, when an insurance company has this built in conflict of interest, it is going to err on the side of profit and pleasing their shareholders at the expense of their policy holders. What does this mean to you and me? It means that if you and I are seriously injured in an accident, we are going to want to have a mutual insurance company as opposed to one that is more interested in making profit for its shareholders. So, Val Choice has crunched the numbers and percentages of claim’s payouts to come up with a better ranking of which auto insurance company one should choose based on how good it is at paying your claims, your medical bills, expenses, car damage, etc.

The basic premise is that you cannot please shareholders (who are only interested in profit) and still pay out claims in a fair manner to policyholders who are more interested in a fair and speedy claim’s process. The policyholders want to be fairly compensated for their injuries and want to make sure all their medical bills are promptly paid. This desire sharply conflicts with the desires of shareholders who merely are concerned with how much profit they will make each year. Therefore, it is of great importance to pick the right company based upon their history of paying claims, fairly and completely. When you are injured in an accident, you do not want to be bothered by a conflict of interest inside the workings of your own insurance company.

Unfortunately, the largest group of auto insurance companies are publicly traded companies like Allstate, Geico and Progressive. Warren Buffet’s company is an owner of Geico so we all know what that means–Buffet is in business to make money and profit so these type of companies have that built in pressure to try to serve 2 masters: shareholders and policyholders. It is a difficult thing to serve 2 masters!

Val Choice analyzed the claims paying history of 312 auto insurance companies. These companies basically accounted for 98 percent of the total market in the US. It compared the paid loss ratio of all these companies (which is basically the dollar amount these companies brought in as premiums vs. the amount they paid out in claims). Companies with higher paid loss ratios spend more money paying their customers claims than those with low ratios. Thus, as a consumer, you want to pick a company with a high paid loss ratio. Of course, as one might expect, the companies that paid out the least money in claims were the publicly held car insurance companies.

Most consumers pick a car insurance company based solely on who has the cheapest price or lowest premiums. This is not the best way to choose an insurance company. It is very complex to figure out the difference in claims histories and payouts amongst the multitude of auto insurance companies. I applaud Mr. Karr in developing the software and creating this website to help educate consumers and to guide them in choosing the right companies with better paying claim’s departments. I would advise everyone to look at this website and go through the process of choosing a company that has a better history of paying claims. After all, we pay insurance premiums at great expense every month and we deserve to be treated fairly when we are injured and have to use our hard earned premium money.

A personal injury lawyer with over 10 years of experience, Ryan Malnar serves Colorado Springs with honesty & integrity.