Financial strength ratings, which indicate an insurer’s ability to pay future claims, are based on assessments from independent agencies such as AM Best and Demotech.
Consumer complaint ratings are based on complaints to state regulators relative to a company’s size. NerdWallet examined complaints received by state insurance regulators and reported to the National Association of Insurance Commissioners in 2021-2023. To assess how insurers compare to one another, the NAIC calculates a complaint index each year for each subsidiary, measuring its share of total complaints relative to its size, or share of total premiums in the industry. To evaluate a company’s complaint history, NerdWallet calculated a similar index for each insurer, weighted by market shares of each subsidiary, over the three-year period. NerdWallet conducts its data analysis and reaches conclusions independently and without the endorsement of the NAIC. Ratios are determined separately for auto, home (including renters and condo) and life insurance.
Coverage ratings evaluate each company’s personal property coverage (replacement cost vs. actual cash value) and how many common policy endorsements are available.
Consumer experience ratings evaluate how easy it is to interact with an insurance company, including getting quotes, accessing customer support and filing and tracking claims.
Discount ratings are based on how many potential discounts an insurance company offers its policyholders.
Bonus points may be awarded to insurers that offer useful features such as coverage for flood or earthquake damage.