How Can I Tell If My Auto Insurance Company Is Financially Stable?
Last Updated on September 28, 2026 by James Shaffer
Financial strength is an important factor to consider when choosing a car insurance company. An insurer needs enough capital and financial resources to pay covered claims not only during normal years, but also after severe storms, large catastrophe losses, market downturns, and other periods of financial stress.
Fortunately, you do not have to analyze an insurance company’s financial statements yourself. Independent rating agencies evaluate insurers and publish financial strength ratings that can help you understand their ability to meet ongoing insurance obligations.
At a Glance
- Check financial strength ratings: AM Best specializes in insurance ratings, while S&P Global Ratings, Moody’s, and Fitch also evaluate insurers.
- Look at the correct rating: An insurer’s financial strength rating is more relevant to policyholders than the debt rating of its parent company.
- Ratings are not guarantees: A strong rating indicates an agency’s opinion of an insurer’s ability to meet its obligations, but it does not guarantee that every claim will be paid.
- Verify the exact insurer: Large insurance groups may contain several underwriting companies with different ratings, so check the legal company named on your policy or quote.
- How to Tell If an Insurer Is Financially Stable
- Why Financial Strength Matters for Car Insurance
- What Factors Affect an Insurer’s Financial Strength Rating?
- Can an Insurance Company’s Rating Change?
- Examples of Strong AM Best Ratings Among Major Auto Insurers
- How New York Drivers Can Research an Insurance Company
- What Happens If a New York Auto Insurer Becomes Insolvent?
- Financial Strength Is Only One Part of Choosing an Insurer
- FAQs on Car Insurance Company Financial Strength
How to Tell If an Insurer Is Financially Stable
The easiest place to start is with an independent financial strength rating. These ratings are designed to express an agency’s opinion of an insurance company’s ability to meet its ongoing obligations to policyholders.
AM Best is particularly useful for insurance shoppers because it specializes in the insurance industry. Other major organizations that issue insurer financial strength ratings include S&P Global Ratings, Moody’s Investors Service, and Fitch Ratings.
Each organization uses its own methodology and rating scale. That means an A+ from one rating agency should not automatically be treated as equivalent to an A+ from another. If you compare ratings from multiple agencies, check the definition of each grade rather than comparing the letters alone.
Also make sure you are looking at an insurance financial strength rating rather than a rating on the insurer’s parent company or its corporate debt. Debt ratings are primarily intended to evaluate credit risk for lenders and investors, while financial strength ratings focus on an insurer’s ability to meet insurance obligations.
What AM Best Ratings Mean
AM Best’s Financial Strength Rating scale currently includes the following categories. The ratings are opinions of relative financial strength, not guarantees that an insurer will remain financially healthy or pay any particular claim.
| AM Best Rating | Category | General Meaning |
|---|---|---|
| A++ / A+ | Superior | Superior ability to meet ongoing insurance obligations |
| A / A- | Excellent | Excellent ability to meet ongoing insurance obligations |
| B++ / B+ | Good | Good ability to meet ongoing insurance obligations |
| B / B- | Fair | Fair ability, with greater vulnerability to adverse changes |
| C++ / C+ | Marginal | Marginal ability to meet ongoing insurance obligations |
| C / C- | Weak | Weak ability to meet ongoing insurance obligations |
| D | Poor | Poor ability to meet ongoing insurance obligations |
You can review the full scale and methodology through AM Best’s rating guide.
Quick tip: Do not rely on a single letter grade alone. Check the rating’s date, outlook, and the exact underwriting company that would issue your policy.
Why Financial Strength Matters for Car Insurance
Insurance companies collect premiums in exchange for taking on the risk of future claims. To remain financially healthy, an insurer must maintain enough capital to handle both expected claims and unexpectedly severe losses.
For example, widespread natural disasters can lead to a large number of auto claims within a relatively short period. Flood, hail, falling trees, fire, and other losses may generate substantial comprehensive insurance claims across an affected region.
Economic conditions, investment losses, unexpectedly high claim severity, inflation in repair and medical costs, litigation trends, and changes in an insurer’s underwriting results can also affect financial performance.
A strong financial strength rating does not mean an insurer will approve every claim. Claims can still be denied when a loss is excluded, coverage has lapsed, policy limits are insufficient, or other policy terms apply. Financial strength ratings focus on the insurer’s ability to meet its obligations, not whether a particular loss is covered.
What Factors Affect an Insurer’s Financial Strength Rating?
Financial strength ratings involve much more than simply checking how much cash an insurer has. Under its current credit rating methodology, AM Best evaluates four major areas:
- Balance sheet strength: This includes capitalization, investment risk, reserves, liquidity, financial leverage, and the insurer’s ability to absorb unexpected losses.
- Operating performance: Rating analysts examine profitability and whether the insurer has produced sustainable financial results over time.
- Business profile: Factors can include the insurer’s market position, geographic concentration, product mix, distribution, and exposure to different types of risk.
- Enterprise risk management: Rating agencies consider how effectively the insurer identifies, measures, manages, and prepares for risks that could affect its financial condition.
Because these factors can change, a financially strong company today is not guaranteed to maintain the same rating indefinitely.
Can an Insurance Company’s Rating Change?
Yes. Financial strength ratings can be upgraded or downgraded as an insurer’s finances and risk profile change. Rating agencies may also change the company’s rating outlook or place a rating under review before changing the actual grade.
Changes can result from deteriorating underwriting results, catastrophe losses, declining capital, investment problems, acquisitions, changes in business strategy, increased leverage, or other developments affecting the company’s finances.
This is one reason older articles and insurer comparisons can become inaccurate. For example, AM Best lowered State Farm Group’s Financial Strength Rating from A++ to A+ in November 2025. Both grades remain within AM Best’s “Superior” category, but the change illustrates why current ratings should be checked rather than relying on an old comparison.
Examples of Strong AM Best Ratings Among Major Auto Insurers
Several major car insurance groups currently hold ratings in AM Best’s highest “Superior” category. The table below shows recently verified examples. It is not a ranking of the companies, and ratings can change.
| Insurance Group | AM Best Financial Strength Rating | Recent Rating Action |
|---|---|---|
| GEICO | A++ (Superior) | Affirmed April 2026 |
| USAA | A++ (Superior) | Affirmed June 2026 |
| Travelers | A++ (Superior) | Affirmed August 2026 |
| State Farm | A+ (Superior) | Rating action November 2025 |
| Allstate | A+ (Superior) | Affirmed September 2026 |
| Progressive | A+ (Superior) | Affirmed May 2026 |
| Amica | A+ (Superior) | Affirmed March 2026 |
Large insurance brands frequently operate through multiple subsidiaries. The rating shown for a group may not necessarily be the rating assigned to every affiliated company. Before relying on a rating, identify the legal insurer that would actually underwrite your New York policy and check that company’s current rating.
How New York Drivers Can Research an Insurance Company
Financial strength should be one part of your research rather than the only factor you consider. Before buying a New York auto policy, you can use the following process:
- Identify the underwriting company. Look for the legal insurance company name on the quote, declarations page, or policy documents rather than relying only on the consumer-facing brand.
- Check its financial strength rating. Search AM Best and, when available, compare the results with S&P Global Ratings, Moody’s, or Fitch.
- Verify its New York authorization. The New York Department of Financial Services Insurance Company Search allows consumers to look up insurers authorized in the state.
- Review regulatory and complaint information. The National Association of Insurance Commissioners consumer tools provide information that can help shoppers research insurance companies, including licensing, financial information, and complaint data.
- Compare the policy itself. Price, coverage limits, deductibles, exclusions, optional coverages, claims service, and customer experience can still differ substantially between financially strong insurers.
What Happens If a New York Auto Insurer Becomes Insolvent?
New York has regulatory procedures for dealing with insurers that become financially impaired or insolvent. The Superintendent of Financial Services can serve as receiver, with the New York Liquidation Bureau handling insurance company rehabilitation and liquidation proceedings under court supervision.
New York also maintains insurance security funds that can provide protection for certain eligible claims when an authorized insurer becomes insolvent. The New York Department of Financial Services describes the state’s Property/Casualty Insurance Security Fund, which applies to qualifying property and casualty insurance obligations.
These protections have eligibility requirements and limits, however, so they are not a substitute for choosing an insurer carefully in the first place.
Financial Strength Is Only One Part of Choosing an Insurer
Financial strength ratings can help you determine whether an insurer appears capable of meeting its ongoing obligations, but they do not tell you everything about the company.
A highly rated insurer can still be expensive for your particular driver profile, and a strong financial rating does not necessarily indicate better customer service or a smoother claims experience. When comparing car insurance companies, consider financial strength alongside coverage, price, complaint history, claims service, and the terms of the policy you are actually buying.
FAQs on Car Insurance Company Financial Strength
What is the best financial strength rating for an insurance company?
On AM Best’s Financial Strength Rating scale, A++ and A+ are both in the Superior category, with A++ being the highest rating. Other rating agencies use different scales, so their grades should be interpreted using that agency’s definitions.
Is an AM Best B+ rating financially stable?
AM Best classifies B+ and B++ as Good, meaning the agency believes the insurer has a good ability to meet ongoing insurance obligations. However, no single rating is a guarantee of future financial condition, so shoppers should consider the rating, outlook, company-specific circumstances, and other available information.
Does a high financial strength rating guarantee my claim will be paid?
No. Financial strength measures an insurer’s ability to meet its obligations. Whether a particular claim is covered still depends on the policy’s terms, exclusions, limits, deductibles, the facts of the loss, and other applicable requirements.
Why might two companies with the same brand have different ratings?
Major insurance groups often contain multiple legal insurance companies. Individual subsidiaries can have different capital structures, business lines, geographic exposures, or group support arrangements, so their ratings may differ.
How can I find the company that actually underwrites my car insurance policy?
Check your quote, policy declarations page, insurance identification card, or other policy documents for the full legal name of the insurer. That is the company whose financial strength rating is most relevant to your policy.