What To Look For When Choosing An Insurance Rating

man researching on laptop

Know insurance ratings are important, but I don’t quite understand what I should be looking for. Can you help?

As an industry standard, the A.M. Best Ratings are the benchmark for evaluating and comparing insurance companies. Directly from their website, www.ambest.com, “A Best’s Financial Strength Rating is an independent opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contract obligations. It is based on a comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile.”

Although there are many factors used in determining the strength of an insurance company, the A.M. Best Ratings use a grading scale to consolidate all the information into one indicator for ease of use. Below you will see the “grading scale” assigned to an insurance company’s strength and the description of the grade.


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


As a rule, you the property owner should only purchase insurance from a carrier with a “Secure” rating (B+ or better). Most of the carriers who are offering competitive terms in this market have been A- or better. There are occasions where a B+ carrier would be acceptable to use if they were an “Admitted” carrier.

The A.M. Best Ratings are useful for the consumer, but they are also used by lenders in establishing a minimum requirement for lending.  Most lenders require the mortgagee to use an “A” rated or better insurance company. This provides the lender with a level of comfort their loan is secure with a financially solvent insurance company in the event of a loss.

Insurance companies realize the importance of their A.M. Best rating as well. The higher the rating, the more secure their product and service is seen in the market. In the event their ratings fall below a “Secure” rating, in most cases below an “A” rating, lenders and consumers will be forced to replace coverage with a new carrier with an A.M. Best rating meeting these minimum requirements.  As the carrier loses business due to their down graded A.M. Best rating, their premium income is reduced which will further reduce their rating.

In summary, the easiest way to understand an insurance company rating is to review the grading scale above and make sure you are with a “secure” company. If you require further information, you can use the free portion of the A.M. Best Rating site to review the full report of any insurance company to help in your selection process. As there are hundreds of carriers competing for your premium dollars in this market, and the savings are substantial, the A.M. Best Ratings are industry benchmark for comparing and evaluating your current or new insurance company.  Paul C. Tradelius Jr.


Paul C.  Tradelius Jr., President at Commercial Coverage Insurance Agency. Commercial Coverage works with over 100 insurance companies on a national basis. 415-436-9800.

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