AM Best is one of three major credit-rating agencies that Policygenius uses to assess the financial confidence of a homeowners insurance company. This helps us better understand what customers can expect out of each company when filing a claim, and how much they can ultimately trust their insurer to pay out claims in the wake of a disaster.
AM Best ratings are a great tool for assessing the relative strength of homeowners insurance companies. Here’s how it all breaks down.
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How does AM Best rank homeowners insurance companies?
AM Best ratings range from A to C, with varying plus or minus signs to distinguish each score. A double plus sign would be the highest version of that letter rating, while a single minus sign would be the lowest.
1: C, C- (weak)
2: C++, C+ (marginal)
3: B- (fair)
4: B (fair)
5: B+ (good)
6: B++ (good)
7: A- (excellent)
8: A (excellent)
9: A+ (superior)
10: A++ (superior)
AM Best uses a series of financial factors to evaluate how a homeowners insurance company is currently doing, as well as how likely the company is to pay out what’s owed to its customers. Those factors include:
Balance sheet strength: A company’s cash on hand (liquidity), how efficiently the company generates earnings (quality of capital), quality and appropriateness of reinsurance programs, and more.
Business profile: Includes the insurer's market position, management quality, and distribution channels for their products.
Enterprise risk management (ERM): Analysis of risk-management framework and capability relative to the insurer’s risk profile.
Operating performance: Stability, diversity, and sustainability of the company’s earnings sources, plus relationship between earnings and liability.
These four factors are considered by a committee, which then determines the overall score of each homeowners insurance company. Those who have a solid flow of cash and predictable expenses tend to score higher, especially if their income is diversified and their company is strongly branded.
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How do we use AM Best rankings in our homeowners insurance reviews?
We rate home insurance companies based on four key components:
Price
Customer experience
Coverage options
Financial strength
At Policygenius, we use AM Best as one of three major credit-rating agencies to determine a homeowners insurance company’s financial strength and stability. Each letter score is assigned a numerical value from 1 to 10, and then we average those scores together to get our financial strength score.
>> Read our home insurance reviews of 60+ companies
AM Best ratings of the best home insurance companies
Company | AM Best rating | Best for |
|---|---|---|
Auto-Owners Insurance | A++ (superior) | Overall |
USAA | A++ (superior) | Military families |
State Farm | A++ (superior) | Widely available coverage |
Amica | A++ (superior) | Customer service |
Travelers | A++ (superior) | Bad credit |
Erie | A+ (superior) | Comprehensive dwelling coverage |
Nationwide | A+ (superior) | Easy claims filing |
Allstate | A+ (superior) | Airbnbs |
American Family | A (excellent) | Customizable policy options |
Farmers | A (excellent) | Discounts and policy perks |
AAA | A (excellent) | New homeowners |
Foremost | A (excellent) | High-risk homes |
Neptune | A (excellent) | Private flood insurance |
Hippo | A- (excellent) | Smart home insurance |
Openly | A- (excellent) | High-value homes |
Stillwater | A- (excellent) | Lapse in coverage |
Collapse table 
>> The best home insurance companies of 2024
Why do we trust AM Best?
AM Best has been evaluating insurance companies for more than 100 years, so homeowners insurance customers can rest assured that it knows the worth of the companies they’re doing business with: AM Best analysis and ratings are known for their scrutiny and accuracy, rooted in a century of expertise.
Best’s Credit Ratings™ are under continuous review and subject to change and/or affirmation. For the latest Best’s Credit Ratings™ and Best’s Credit Reports (which include Best’s Credit Ratings™), visit the A.M. Best website at http://www.ambest.com. See Guide to Best’s Credit Ratings™ for explanation of use and charges.
Best’s Credit Ratings™ reproduced herein appear under license from A.M. Best and do not constitute, either expressly or impliedly, an endorsem*nt of Policygenius or its recommendations, formulas, criteria or comparisons to any other ratings, rating scales or rating organizations which are published or referenced herein. A.M. Best is not responsible for transcription errors made in presenting Best's Credit Ratings™. Best’s Credit Ratings™ are proprietary and may not be reproduced or distributed without the express written permission of A.M. Best Company.
A Best’s Financial Strength Rating opinion addresses the relative ability of an insurer to meet its ongoing insurance obligations. It is not a warranty of a company’s financial strength and ability to meet its obligations to policyholders. View our Important Notice: Best’s Credit Ratings for a disclaimer notice and complete details at https://www.ambest.com/ratings/index.html.
Author
Reviews Editor
Haley Sprankle is a former reviews editor at Policygenius who specializes in homeowners and auto insurance. Previously, she was a writer at Wirecutter and The New York Times.
Editor
Senior Managing Editor & Home Insurance Expert
Jennifer Gimbel is a senior managing editor at Policygenius, where she oversees all of our insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.
Expert reviewer
Property & casualty claim consultant and expert witness
Britta M. Moss, CPCU, SCLA, AIC-M, has over 25 years of insurance industry experience. In her work as aproperty and casualty claim consultant, she provides consultation and expert witness services in claim handling standards, practices, and norms. She has been retained bylaw firms representing plaintiffs and those representing insurer defendants involved in disputes or litigation regarding coverage analysis, investigation, liability determination, damage evaluation, negotiation and settlement.She is a graduate of The Ohio State University.
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