A weak auto insurer represents a potential for financial loss to its policyholders, not to mention headaches and hassles -- although you, as a policyholder, may never realize that the insurer's financial problems are the cause of your hassles with the company, such as slow claims paying and increasing renewal rates.
In addition to the loss of premium dollars, policyholders with a failed insurer are forced to scramble to purchase replacement coverage from other carriers, often at higher rates. Those who were unfortunate enough to have a claim outstanding with the failed company can end up footing the bill themselves.
TheStreet.com Ratings' list of the strongest automobile insurers in the U.S. is comprised of 20 companies that have met our tough standards for financial strength.
These companies are well-capitalized and profitable year after year. They hold high-quality investments and are operationally stable. If you buy insurance coverage from these companies, you are highly unlikely to ever be caught in a company failure.
That's why it's important to check the financial security offered by an insurer prior to purchasing a policy and then periodically monitor the company's condition going forward. There are plenty of options making it easy to avoid low-rated companies. TheStreet.com Ratings considers 72 companies to be Recommended Companies because of their B+ or higher financial strength rating.
The 20 companies included in our Strongest list write at least $25 million in individual auto premiums. Most of them also write commercial auto business, but not all.
All of the A+ rated insurers also appear on the TSC Ratings list of Top-Rated Homeowners Insurers. It's common for companies to offer both auto and homeowners insurance because of the cross-selling opportunity. In fact, 166 companies write both. On the Strongest list, all but four companies sell both.
The following U.S. auto insurance underwriters received the highest ratings from TheStreet.com Ratings.
Companies on the Strongest Auto Insurers list, but not the Strongest Homeowners Insurers list, are Mercury Insurance Company, a unit of Mercury General (MCY), Dairyland Insurance Company, Pioneer State Mutual Insurance Company and GEICO Indemnity Company, a unit of Berkshire Hathaway (BRK.A).
Mercury Insurance Company sells auto insurance primarily in California. TheStreet.com Ratings also rates Mercury's 11 sister companies that sell auto and homeowners insurance in 12 other states including Illinois, New York, New Jersey, Florida and Pennsylvania.
Dairyland Insurance Company is part of the Sentry Insurance Group, and sells both auto and motorcycle coverage in nearly all states nationwide. Again, TheStreet.com Ratings rates Dairyland's 10 sister companies, which can be found in the Ratings Screener.
Pioneer State Mutual Company has been around since the early 1900s and offers many types of insurance coverage in the state of Michigan only. In addition to auto insurance, the company sells fire, homeowners, commercial multi-peril, inland marine, workers comp and liability.
GEICO Indemnity is a household name, thanks to the massive advertising campaign with the popular little green gecko. It's owned by the Government Employees Insurance Company, which is a wholly owned subsidiary of Warren Buffett's Berkshire Hathaway. The company focuses on selling auto insurance in all 50 states.
There are many very good companies throughout the U.S. that are not necessarily household names, but they are strong, well-managed companies that you should consider when shopping for insurance.