Choosing Between Insurance Companies: Criteria & Policies

Instructor: Noel Ransom

Noel has taught college Accounting and a host of other related topics and has a dual Master's Degree in Accounting/Finance. She is currently working on her Doctoral Degree.

This lesson focuses on the various factors to consider when selecting an insurance company, as well factors to consider when selecting insurance policies, such as price, reputation and financial stability.

Choosing an Insurance Company

Meet Nancy, a college graduate starting her first job. Nancy just recently purchased a new car and a home and is considering protecting her new assets by purchasing some insurance. Nancy is not sure which type of insurance policy to purchase or which insurance company to select. There are hundreds of insurance companies in business today, and it is very important for Nancy to understand what factors to consider when selecting an insurance company that meets her needs.

Factors to Consider When Selecting an Insurance Company

Some of the factors Nancy should consider before she chooses an insurance company are the company's reputation, financial stability, customer service, price, and the ability to pay claims.

1. The company's reputation is very important, and the experiences of other customers are valuable to determine how the company treats its customers. Nancy can perform a quick online search of various insurance companies' reviews by other customers.

2. The financial stability of an insurance company is important because customers need to know if the company can make timely and accurate payments of various claims. Nancy can review the financial statements and performance of each insurance company to determine whether the company can make payments.

3. Nancy is extremely concerned about the customer service of the insurance company. Nancy needs to find out if the company responds promptly to the needs of customers. She also needs to determine how well the company resolves problems for customers.

4. Price is another factor to consider when selecting an insurance company. Nancy is a new homeowner, and although she has a new job, she wants to be careful not to incur too many expenses. Nancy can compare the prices of each policy from each company to determine which company will provide the most value at the most reasonable cost.

5. Claims paying ability is another factor to consider before selecting an insurance company. Nancy needs to know how well the company pays claims. If the company gives its customers a hard time before paying claims, Nancy may not want to select that particular company.

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