Last Updated on December 29, 2025

When you buy auto insurance, you’re not just buying a price—you’re buying a promise to pay covered claims. Most drivers focus on premium and discounts, but it’s also smart to confirm your insurer is financially stable enough to handle claims during high-stress periods (like major storms, wildfires, or large spikes in litigation and repair costs).

Financial strength doesn’t determine whether your claim is covered (that depends on your policy and the facts of the loss). But it can affect how reliably an insurer can meet its obligations when claim volume surges. If you’re unsure why a claim might be rejected for reasons unrelated to solvency, see how and why insurers can deny your claim.

Key Takeaways

• Financial strength doesn’t decide whether your claim is covered, but it can affect how reliably an insurer can pay covered claims—especially during disasters or claim surges.
• Always verify the exact issuing insurer on your declarations page (not just the brand name) before checking ratings or complaint data.
• Start with A.M. Best Financial Strength Ratings, then cross-check licensing and complaint patterns using your state regulator and the NAIC Consumer Insurance Search.
• State guaranty funds can provide a safety net if an insurer fails, but coverage has limits—so insurer stability is still worth checking before you buy.

Why Financial Stability Matters for Car Insurance

Most insurers are regulated, audited, and required to maintain reserves—but insurance companies can still run into trouble. A financially stable carrier is more likely to:

• Pay valid claims promptly (even during catastrophe seasons)
• Renew policies consistently (instead of sudden cancellations or pullbacks)
• Absorb unexpected losses without cutting corners on service

That said, “small” doesn’t automatically mean “unstable.” Some regional insurers are excellent. The key is doing a quick stability check before you commit.

Step 1: Identify the Exact Insurance Company Behind the Brand

Start with your declarations page. Many “big-name” brands operate multiple insurance companies (subsidiaries), and ratings can vary by the legal entity that actually issued your policy.

Look for details like:

• Company name (the underwriting/issuing insurer)
• NAIC Company Code (often listed on policy documents)
• Domicile state (where the insurer is based/regulated)

Use those exact details when searching ratings and regulator databases. Don’t assume the parent brand name is the same entity on your policy.

Step 2: Check Independent Financial Strength Ratings

Several independent rating organizations publish opinions about an insurer’s ability to pay policyholder obligations. Some ratings are free to view, while others require registration or a paid subscription.

Start with A.M. Best

A.M. Best ratings are widely used for insurance because A.M. Best focuses specifically on the insurance industry. You can search for companies using the Best’s Credit Rating Center here: https://ratings.ambest.com/.

The A.M. Best metric consumers typically look for is the Financial Strength Rating (FSR). A simplified view of the FSR scale is:

• Superior: A++ / A+
• Excellent: A / A-
• Good: B++ / B+
• Fair: B / B-
• Marginal: C++ / C+
• Weak: C / C-
• Poor: D

You can read A.M. Best’s official rating definitions here: https://www.ambest.com/ratings/guide.pdf.

Check Other Rating Providers (When Available)

Depending on the insurer, you may also find ratings (or rating explanations) from other firms:

• S&P Global Ratings (Insurer Financial Strength): https://www.spglobal.com/ratings/en/products/financial-strength-rating
• Fitch Ratings (Insurer Financial Strength): https://www.fitchratings.com/insurance
• KBRA (Insurance Financial Strength): https://www.kbra.com/sectors/insurance/issuers
• Demotech (Financial Stability Ratings): https://www.demotech.com/financial-stability-ratings/

Tip: If you can’t access a rating directly, try searching for the insurer’s “investor relations” or “financial strength rating” page. Many carriers publish their current ratings and outlooks in press releases or official company documents.

Step 3: Verify Licensing and Consumer Complaint Data

Financial ratings are important, but don’t stop there. Two additional checks can help you avoid surprises: (1) make sure the insurer is licensed in your state and (2) look at complaint patterns.

Use the NAIC Consumer Insurance Search

The National Association of Insurance Commissioners (NAIC) provides a free tool where you can look up insurers and see details like licensing and complaint information: https://content.naic.org/cis_consumer_information.htm.

This is especially helpful if a company operates under multiple similar names. Match what you see in the NAIC database to the exact company name on your declarations page.

Check Your State Insurance Department

Your state’s Department of Insurance (or similar regulator) is the authority on whether a company is licensed and in good standing. If you need a quick directory to find your state’s regulator, the NAIC maintains an insurance department contact hub here: https://content.naic.org/state-insurance-departments.

Step 4: Understand the Guaranty Fund Safety Net

If an insurer becomes insolvent, state guaranty funds can step in to pay covered claims up to limits set by state law. This system is one reason insurance is regulated at the state level.

However, guaranty fund coverage has caps and rules, and it may not apply to every scenario (for example, certain non-admitted/surplus lines policies can be treated differently). For an overview of how the property and casualty guaranty fund system works, see: https://www.ncigf.org/backgrounder.

The takeaway: the safety net exists—but it’s not a reason to ignore financial stability, especially if you want the smoothest possible claims experience.

Red Flags That Warrant a Second Look

• Not rated anywhere (not always bad, but you should do deeper checks through regulators and NAIC tools)
• Frequent downgrades or a clearly negative outlook
• High complaint volume relative to size (check NAIC and your state regulator)
• Chronic claims delays (delays can happen for many reasons, but persistent issues are worth investigating). If you’re dealing with a stalled claim right now, read how long an auto insurance claim can stay open.

Quick Checklist Before You Buy or Renew

• Confirm the issuing insurer and NAIC code from your declarations page.
• Look up the insurer on A.M. Best and note the rating and outlook.
• Verify the insurer is licensed in your state and review complaint data using the NAIC search tool.
• Compare quotes from multiple carriers so you’re not forced into a risky option. Start here if you want a broader shopping list: list of car insurance companies.
• If you’re debating a national carrier vs. a smaller regional insurer, read: are major auto insurance companies better than smaller ones?

FAQs on Insurance Company Financial Stability

Final Word

Most drivers never think about insurer solvency—until they have a major claim. Taking five minutes to check ratings, licensing, and complaint history can help you avoid headaches later and protect you as a policyholder. When in doubt, choose the carrier that’s transparent about ratings, easy to verify through regulators, and consistently stable over time.