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How do you compare life insurance companies? What features do you examine? What criteria do you use? How do you know what to look for? Making sure that your insurance company is financially sound is an important part of helping to ensure family security.

Fortunately, there are a number of independent companies that make these evaluations. These rating companies carefully examine each insurance company in the areas of profitability, debt, liquidity, and other factors. From the results of these examinations, they then issue overall ratings.

Looking up a company’s rating will provide you with a snapshot of that company’s financial health. Tracking the company’s rating on a regular basis may give you some advance warning of trouble.

The four most prominent rating companies are A.M. Best, Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings. Each of these services uses slightly different criteria when rating companies. As a result, each may have a slightly different view of a given company. A.M. Best ratings are based on financial conditions and performance; Moody’s, Fitch Ratings, and Standard & Poor’s ratings are based on claims-paying ability.

You should be able to find copies of at least one of these ratings in the reference section of your local library. If you are unable to find them, or if the ratings in your library are outdated, you can contact the services directly. All four services will provide ratings over the phone.

• A.M. Best Company: 908-439-2200, www.ambest.com
• Standard & Poor’s: 877-772-5436, www.standardandpoors.com
• Moody’s Investors Service: 212-553-1653, www.moodys.com
• Fitch Ratings: 800-953-4824, www.fitchratings.com

Extending Liability Coverage

In this litigious society, no one is immune from potential lawsuits. Anyone with significant assets might need protection from the devastating effects of a liability lawsuit.

Elected officials and members of boards may be especially vulnerable. It’s not uncommon for plaintiffs to name everyone involved in an incident who has any perceived authority, responsibility, or ability to pay.

Personal liability lawsuits sometimes award the future earnings of the defendant. This makes many self-employed people, and some corporate officers, vulnerable to personal liability suits.

Fortunately, there is a way to help protect yourself. You can supplement both your auto and homeowner’s policies with excess liability insurance, or an “umbrella policy.” For as little as a few hundred dollars per year, umbrella liability policies may provide between $1 million and $5 million of protection from negligence claims, libel, slander, or defamation for you and your household members. And by buying your auto, homeowners, and excess liability policies from the same company, you may be able to reduce the total cost by as much as 15 percent.

Most individual liability policies, however, don’t cover occupational risks such as professional malpractice. In many cases, professional organizations such as the American Medical Association and the American Bar Association offer group policies for their members. The state equivalents of these organizations are usually quite aggressive in finding group providers to protect their members. In some professions, a local member may take the additional responsibility of helping to administer the group insurance for the state’s participants — overseeing and monitoring the coverage and costs and helping watch for abuses.

Because liability is an area connected with ongoing litigation, it changes often. Professionals should closely follow developments in their own fields in order to avoid expensive mistakes. In many businesses and professions, there are watchdog groups appointed to provide current information. Large groups often evaluate competitive policies annually to assess the performance of their group’s insurance company. Such an organization may change insurance companies on a regular basis, as this is a very competitive area.

When evaluating your personal liability, consider the following:

• Everyone in your household should be covered, including those who don’t live at home.
• Your policy should cover physical injuries, libel, slander, invasion of privacy, malicious prosecution, wrongful eviction, defamation of character, and discrimination.
• Shop around for the lowest number of exclusions. For example, many policies will not help you if you are sued as a result of your participation on a board or less formal committee.
• Be aware of wording that limits coverage to exclusive causes of injury.

MANA welcomes your comments on this article. Write to us at [email protected].