What are A.M. Best homeowners insurance ratings?

A.M. Best rates homeowners insurance companies’ ability to fulfill claims and other financial obligations to their customers based on their credit.

Headshot of Haley Sprankle


Haley SprankleHaley SprankleReviews EditorHaley 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.

Published|2 min read

Policygenius content follows strict guidelines for editorial accuracy and integrity. Learn about our editorial standards and how we make money.

A.M. 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 provider.

A.M. Best ratings are a great tool for assessing the relative strength of homeowners insurance companies. Here’s how it all breaks down.

How does A.M. Best rank homeowners insurance companies?

A.M. Best ratings range from an A to an F, 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. A.M. 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: Including market position, management quality, and distribution channels for the company’s 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.

Ready to shop home insurance?

Start calculator

How do we use A.M. Best rankings in our homeowners insurance reviews?

Homeowners insurance reviews are rated based on five key components—the price, the financial confidence, the third-party ratings, the policy options, and the customer experience. At Policygenius, we use A.M. Best as one of three major credit-rating agencies to determine a homeowners insurance company’s financial confidence. Each letter score is assigned a numerical value from 1 to 10, and then we average those scores together to get our financial confidence score.

Why do we trust A.M. Best?

A.M. 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: A.M. 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 endorsement 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.