Independent site. Not affiliated with State Farm, Geico, Progressive, USAA, Allstate, Nationwide, Travelers, Liberty Mutual, Farmers, AAA, The Zebra, Insurify, NerdWallet, Compare.com, Jerry, or any insurance carrier or comparison marketplace. We do not collect personal information, do not generate leads, and do not earn commission on any policy you buy. Information is educational only. Verify coverage, rates, and licensing with your state department of insurance and the carrier directly before purchasing.

Due Diligence

How to Vet a Car Insurance Company Before You Bind a Policy

The cheapest quote is not always the best policy. A low premium from a carrier with a 3x-baseline complaint ratio or a B-tier financial-strength rating is a false saving. Two or three minutes of vetting before binding can prevent a claims-time disaster. Here are the three free public tools and how to read them.

Last verified April 2026. Sources: NAIC Consumer Insurance Search documentation; AM Best public ratings methodology; state DOI complaint-handling guides.

Why vetting matters at all

Insurance is a contract you pay for years before you use. The product is realised at claim time. A claim experience is the difference between a carrier that pays the loss promptly, fairly, and without unnecessary friction, and one that drags the process out, under-reserves, or denies and forces appeal. Complaint ratios quantify, indirectly, how often the latter happens. Financial strength ratings quantify, more directly, whether the carrier has the reserves to pay losses at all.

Three minutes per carrier on the shortlist is enough to filter out the worst offenders. The procedure below.

The three-step vetting procedure

1. NAIC Consumer Insurance Search

The National Association of Insurance Commissioners maintains a free public database of consumer complaints filed against US insurers. The tool lives at content.naic.org/cis_consumer_information.htm.

How to use it:

  1. Find the carrier's NAIC company code. Look on your existing policy declarations page under “NAIC Company Code” or “NAIC #.” If you do not have a policy with the carrier, search by carrier name on the NAIC site to retrieve the code.
  2. Open the closed-confirmed-complaint report. The NAIC database tracks all consumer complaints by line of business (auto, home, life, etc.). For auto comparison, filter to the personal auto line.
  3. Read the complaint ratio. The ratio is published as a number normalised against the national average for the line. 1.0 is the industry baseline. Below 1.0 means fewer complaints per premium dollar than average; above 1.0 means more.
  4. Compare against peer carriers. Some lines naturally produce more complaints than others. The relevant comparison is to other auto carriers of similar size, not to industry-wide averages across all lines.

How to read the complaint ratio

  • Below 0.5: Strong. Half or fewer complaints per premium dollar than the industry average.
  • 0.5 to 1.5: Normal range. Most major carriers fall here.
  • 1.5 to 2.5: Yellow flag. Above-average complaints; investigate the complaint categories before binding.
  • Above 2.5: Red flag. Strong reason to choose a different carrier even if the price is competitive.

2. State Department of Insurance complaint index

State-level complaint data is often more granular than the NAIC roll-up. State DOIs publish their own complaint indexes, usually as part of the Annual Market Conduct Report or a dedicated Consumer Affairs Division dashboard. State data includes complaints that did not roll up to NAIC and frequently provides category breakdowns: claims handling, premium disputes, cancellation issues, marketing.

State DOI data is particularly useful for state-specific issues. Florida hurricane claims handling, California wildfire response, Texas hailstorm-driven auto comprehensive claims: these can vary substantially by carrier within a state, and the state DOI is the most current source. See the state DOI directory for the link to your state.

3. AM Best Financial Strength Rating

AM Best is the leading independent rating agency for the insurance industry. Its Financial Strength Rating expresses the carrier's ability to meet ongoing insurance obligations. The full scale, from highest to lowest:

RatingDescription
A++ / A+Superior
A / A-Excellent
B++ / B+Good
B / B-Fair
C++ / C+Marginal
C / C-Weak
DPoor
EUnder Regulatory Supervision
FIn Liquidation

Free consumer access to AM Best ratings is at ambest.com. Search the carrier name; the rating is on the company's overview page, alongside the rating outlook (positive, stable, negative) and the most recent rating action date.

For personal auto, A- is the floor of comfort. Below A-, the carrier may still be solvent and competitive on price, but the financial-strength margin is thinner than necessary given the alternatives. Most major US auto insurers are rated A or A+. The exceptions are some non-standard market specialty insurers that serve high-risk drivers, where ratings of B+ or B++ are common.

Two distinct AM Best ratings exist for most carriers: the Financial Strength Rating (FSR) and the Issuer Credit Rating (ICR). For consumer purposes, the FSR is the relevant one. The ICR matters more for institutional investors and reinsurance counterparties.

If your existing carrier drops a rating tier (e.g. from A- to B++), it is worth understanding why before next renewal. Rating downgrades are typically signalled in advance via a negative outlook months before the actual change. Switch carriers if the carrier moves into B-tier territory and stays there.

4. License verification

Every state DOI publishes a licensed-carriers database. Verify before binding:

  • The carrier is licensed in your state for personal auto.
  • The agent (if applicable) is licensed in your state.
  • Neither has any recent disciplinary actions or consumer alerts.

For agents, the state DOI license search returns the agent's license history and any complaint actions. For carriers, the search confirms current authorisation to write new business in your state. A “quote” from a carrier not licensed in your state is, depending on the situation, either an error or a scam; either way, do not bind.

Bonus checks

J.D. Power consumer satisfaction studies. Useful as a directional signal but limited by sample-survey methodology. Treat the rankings as one input among several; a carrier ranked low on satisfaction but with a strong NAIC complaint ratio probably reflects either a vocal-minority issue or a non-claim satisfaction issue (billing, communication) rather than a fundamental claims- handling problem.

Better Business Bureau. Lower-signal than NAIC because the BBB does not normalise complaints by premium volume. Useful for pattern recognition: if the same complaint type appears repeatedly, that is informative.

State attorney general consumer alerts. Most state AG offices publish consumer alerts when they take action against an insurer. Worth a quick search on the carrier name + your state AG site.

Vetting checklist

Before binding any policy, confirm:

  1. NAIC complaint ratio is at or below 2.0 (ideally below 1.5).
  2. State DOI complaint index for the auto line is in line with peers.
  3. AM Best FSR is A- or better, with stable or positive outlook.
  4. The carrier is licensed for personal auto in your state.
  5. If using an agent, the agent is licensed in your state with no recent disciplinary actions.
  6. The quote spec matches your worksheet exactly.

Two minutes per carrier. Worth it.

Connected pages

Frequently Asked Questions

What is a NAIC complaint ratio?
The complaint ratio is a normalised measure of consumer complaints per dollar of premium written, comparing a specific carrier against the national average for that line of insurance. The baseline is 1.0 (matches industry average). A ratio of 0.5 means half as many complaints per premium dollar as the average carrier; 2.0 means twice as many. Anything above 2.0 is a yellow flag worth investigating; above 5.0 is a red flag worth declining.
What does an AM Best A- rating mean?
AM Best Financial Strength Ratings express the carrier's ability to meet ongoing insurance obligations. The scale runs A++ (Superior), A+, A, A-, B++, B+, B, B-, C++, C+, C, C-, D, E (Under Regulatory Supervision), F (In Liquidation). For personal auto insurance, A- is generally the floor of comfort; below that, the financial-strength margin is thin enough that consumers should look closely at the carrier's outlook (positive, stable, negative).
Should I avoid an insurer with high complaints if the price is low?
Probably yes, if the complaint ratio is materially above industry average (above 2.0). The reason: complaints cluster around claims handling, the moment when an insurer's value is realised. A carrier that pays the lowest premium but takes 90 days to process a claim, requires multiple appeals, or under-reserves the loss is delivering a worse product. The price savings rarely justifies the claims-experience cost.
How do I find an insurer's NAIC company code?
The NAIC company code is a unique five-digit number assigned to every licensed US insurer. You can find it on your existing policy declarations page (look for “NAIC Company Code” or “NAIC #”), on the carrier's state DOI licensing record, or by searching the carrier's name on the NAIC Consumer Insurance Search at content.naic.org. Once you have the code, the complaint-ratio search is straightforward.