Most people pick an insurer by price and a familiar brand. Both matter, but the real test comes years later, when you file a claim and need the company to be solvent, responsive and fair. A few checks before you sign take less than an hour and use free public tools.
1. Confirm the company is licensed in your state
Insurance in the US is regulated state by state. An insurer must be licensed (or, for some specialty risks, approved as a surplus lines carrier) in the state where you live or where the risk is located. The NAIC Consumer Insurance Search lets you look up insurance companies and their subsidiaries, and the NAIC advises consumers to confirm with their state insurance department that a company is licensed. Use the exact legal name shown on the quote: large groups operate through many subsidiaries with similar names, and only one of them will actually issue your policy.
2. Check financial strength ratings
A rating agency's financial strength rating is an opinion about whether the insurer can pay its policy obligations. AM Best, the agency that specializes in insurers, uses this scale in its Guide to Best's Financial Strength Ratings (2026 edition):
| Category | Ratings | What AM Best says |
|---|---|---|
| Superior | A++, A+ | Superior ability to meet ongoing insurance obligations |
| Excellent | A, A- | Excellent ability to meet obligations |
| Good | B++, B+ | Good ability to meet obligations |
| Fair to Poor | B, B- down to D | Financial strength vulnerable to adverse changes |
AM Best stresses that a rating is not a recommendation to buy a policy and does not address an insurer's claims-payment practices. Use it as a floor, not a final answer. For long-term products such as life insurance and annuities, where you rely on the company for decades, financial strength deserves extra weight.
3. Look at complaint data
State regulators publish complaint indexes. As the Indiana Department of Insurance explains, an index of 1.00 means the insurer's share of complaints equals its share of the business written in the state; 0.50 means half as many complaints as expected, 2.00 means twice as many. Compare companies within the same line (auto, home, health) because indexes are calculated separately for each. Very small insurers can show volatile numbers, so look at several years, not one.
4. Compare coverage, not just the premium
Two quotes with different deductibles, limits or endorsements are not comparable. Ask every company to quote the same structure, then compare:
- Limits: liability limits, dwelling amount, death benefit.
- Deductibles: flat dollar or percentage (common for wind and hail in some states).
- Valuation: replacement cost versus actual cash value.
- Exclusions and endorsements: what is added or taken away from the standard form.
- Discounts: bundling, safety devices, claims-free history.
Our calculators for auto, home and life help you set realistic limits before you ask for quotes.
5. Evaluate service and claims handling
Ask how claims are reported (app, phone, agent), whether there is 24/7 claims intake, and whether you can choose your own repair shop or contractor. Read the policy's duties after loss section: missed deadlines for notice or proof of loss can complicate a claim. The Insurance Information Institute also recommends asking your state insurance department for price comparisons and complaint data before you buy.
What protects you if an insurer fails
Every state has guaranty associations that step in when a licensed insurer becomes insolvent. For life and health products, NOLHGA states that most associations provide at least $300,000 in life insurance death benefits, $100,000 in cash surrender values and $250,000 in present value of annuity benefits; some states set different levels. Coverage applies to licensed insurers, which is one more reason to complete step 1. Guaranty protection is a safety net, not a substitute for choosing a strong company.
A quick decision checklist
- Licensed in your state under the exact legal name on the quote.
- Financial strength rating you are comfortable with (many buyers look for A- or better).
- Complaint index at or below average for your line over several years.
- Quotes compared on identical limits and deductibles.
- Clear claims process and contact channels.
Ready to compare? Request quotes for auto, home, life or health coverage. Policies are issued by licensed insurers and placed through licensed producers in your state.