Auto insurance companies can be both national and local. However, even if an
auto insurance company does business in all 50 states, the company is governed
by the insurance laws of the individual states in which they are doing
business.
For example, if you live in Iowa, any auto insurance company providing
insurance in Iowa has to be licensed by the Iowa State Department of Insurance
in order to sell auto insurance in that state.
Is it better to go with one of the large, national auto insurance companies or
a smaller local auto insurance company? That depends on you and your needs.
Basic rates that each insurance company can charge in each state will be
controlled by the state insurance department. However, above and beyond the
basic rate, auto insurance companies have the right to add on to the rate or
discount the rates based on company loss histories. That's why your auto
insurance rates can vary from company to company. It depends on how each auto
insurance company who looks at your profile determines you as a risk based on
the particular loss history of that company. In most cases, a large company is
going to be better able to handle risk than a small company. In addition, most
of the large auto insurance companies are reviewed by A.M. Best, an independent
evaluator. A.M. Best rates auto insurance companies on their financial
practices and soundness. This evaluation can be a good benchmark when comparing
auto insurance companies. You want an auto insurance company that's going to be
around for a while and able to pay a claim should you ever need to file one.
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