How Do AM Best Ratings Work (for Auto Insurance)?

Last Updated on December 29, 2025

It’s smart to assess the financial stability of your insurance company before you buy a policy. Many drivers check AM Best ratings (also written as A.M. Best) when choosing an insurance provider—especially if they want confidence the insurer can pay claims after a major storm season or a spike in repair costs.

Below, we’ll break down how AM Best ratings work for auto insurance, what the grades mean (A++ through D), what “outlook” and “under review” mean, and how to look up the rating for the actual underwriting company on your policy.

Key Takeaways

• AM Best is a credit rating agency focused on the insurance industry, and its ratings help indicate whether an insurer is financially strong enough to meet ongoing claim obligations.
• The AM Best rating that matters most for auto insurance shoppers is the Financial Strength Rating (FSR), which typically ranges from A++ (Superior) down to D (Poor).
• Don’t judge by the letter grade alone—check the insurer’s outlook (stable/positive/negative/developing) and whether the rating is under review (“u”).
• Always verify the AM Best rating for the actual underwriting company listed on your declarations page, since large brands often operate multiple rated subsidiaries.

What Is AM Best?

AM Best is a credit rating agency that specializes in the insurance industry. Their ratings are designed to reflect an insurer’s ability to meet its ongoing insurance obligations over time.

For auto insurance shoppers, the practical question is simple: If I file a big claim, is this company financially strong enough to pay it? AM Best ratings help answer that—although they don’t tell you everything (more on that below).

If you want a deeper walkthrough of financial stability beyond just ratings, see our guide on how to make sure your insurance company is financially stable.

The Rating That Matters Most for Auto Insurance: Financial Strength Rating (FSR)

The AM Best grade most consumers see (and the one that’s most relevant to auto insurance) is the Financial Strength Rating (FSR).

An AM Best FSR is an opinion about an insurer’s financial strength and its ability to meet ongoing policy and contract obligations. It’s not a rating for your specific policy, and it’s not a promise that every claim will be paid (claims can still be denied for coverage reasons, misrepresentation, fraud, exclusions, and more).

Other AM Best Ratings You Might See

AM Best publishes several types of “Best’s Credit Ratings.” Depending on the company and the situation, you may see one or more of these:

• Financial Strength Rating (FSR): The big one for insurance shoppers—focuses on the insurer’s ability to meet policy obligations.
• Issuer Credit Rating (ICR): A broader view of the organization’s ability to meet its financial obligations (not just insurance policies).
• Issue Credit Rating (IR): A rating on a specific financial obligation (like a debt/security issue) rather than the insurer overall.
• National Scale Rating (NSR): A relative creditworthiness measure within a specific country/jurisdiction (you’ll see these more in certain markets).

If you’re shopping for car insurance, start with the FSR, then check the insurer’s outlook and whether the rating is under review.

How AM Best Assigns Ratings

AM Best’s interactive rating process is built around collecting company information, analyzing it, and making decisions via a rating committee. Ratings are then published (if accepted) and monitored on an ongoing basis.

What AM Best Evaluates

While the specifics vary by company, AM Best commonly evaluates factors such as:

• Balance sheet strength: capitalization, reserves, reinsurance, investment risk, liquidity
• Operating performance: underwriting profitability, combined ratio trends, catastrophe exposure, loss trends
• Business profile: market position, product mix, geographic spread, distribution
• Enterprise risk management (ERM): how the insurer identifies and manages risk

How to Read the AM Best Financial Strength Rating Scale

AM Best FSRs use letter grades. In general, higher is stronger. Here’s the scale most consumers see:

Non-Rating Designations You Might See

AM Best also uses a few special designations:

• NR: Not rated
• S: Rating suspended (sudden events or lack of timely information)
• E: Under regulatory supervision (conservation/rehabilitation or similar)
• F: In liquidation (insolvency)

What “Outlook” and “Under Review” Mean

Don’t stop at the letter grade. AM Best ratings often include additional signals:

• Outlook: typically stable, positive, negative, or developing. A negative outlook can be a warning sign even if the current grade looks strong.
• Under review (“u”): a flag that the rating could change after AM Best completes a review.

Also keep in mind that many large insurers operate multiple insurance companies under one brand name. The rating that matters is the rating for the company that actually underwrites your policy and is responsible for paying claims to the policyholder.

How to Check Your Auto Insurer’s AM Best Rating

Use this simple checklist to avoid looking up the wrong company:

1. Find the underwriting company name on your declarations page (or proof of insurance). The brand you see in ads may not be the exact company paying claims.
2. Search the underwriting company using AM Best’s rating search tool: https://ratings.ambest.com/.
3. Confirm the Financial Strength Rating (FSR), the outlook, and whether it’s under review.
4. Compare apples to apples by checking ratings for the same type of entity (for example, the insurer group/pool that writes the auto policies in your state).

AM Best Ratings for Major Auto Insurers

Below is a snapshot of AM Best Financial Strength Ratings (FSRs) referenced in AM Best rating action announcements. Ratings can vary by subsidiary, state-specific underwriting company, or product line—so treat this as a starting point and verify the underwriting company shown on your declarations page.

What If My Insurer Has a Lower Rating (or Isn’t Rated)?

A lower rating doesn’t automatically mean an insurer can’t pay claims—but it can signal higher risk, especially in years with heavy catastrophe losses, major litigation trends, or rapid inflation in parts and labor.

“NR” (not rated) also isn’t automatically bad. Some smaller insurers simply choose not to participate in AM Best’s interactive rating process. If a company is not rated, consider extra due diligence: verify state licensing, look at complaint data from your state insurance department, and consider how long the company has been operating in your state.

AM Best Ratings Don’t Measure Everything

Even a top-tier financial strength rating doesn’t guarantee you’ll love the experience. AM Best ratings are focused on financial strength, not:

• Customer service quality
• How fast claims are handled
• How often claims are disputed (or what documentation they’ll ask for)
• Whether the insurer will be the cheapest for your profile

No matter who you’re insured with, you can protect yourself by documenting damage and gathering evidence for a car insurance claim and understanding basics like how long an auto insurance claim can stay open.

FAQs About AM Best Ratings for Auto Insurance

Final Word on AM Best Ratings for Auto Insurance

AM Best ratings are a useful shortcut for evaluating an insurer’s financial strength—especially the Financial Strength Rating (FSR). If you want the simplest rule of thumb: confirm the underwriting company on your policy, look up the FSR, and pay attention to the outlook and any “under review” flags.

If you’re still comparing options (or buying your first policy), start here: buying car insurance for the first time.