The US auto insurance industry is both large and highly competitive, with hundreds of providers crowding the market. This sector is so large that auto insurance now comprises the dominant line of business within the property and casualty sector, taking up about 35 percent of the total P&C market.
When you have clients that are looking for viable auto insurers, it is part of your job as an insurance broker to find as many viable choices for them as you can. A possible option is AAA Auto Insurance. To decide if this insurer is a viable choice, good references include AAA insurance ratings and reviews like this one. In this article, see how AAA Insurance fares, so you can make an informed decision.
An insurance company’s financial strength rating (FSR) shows whether an insurance company like AAA Insurance can honor claims. Looking at its FSR can help you decide whether its products are reliable and if the company will be able to pay your client’s claims.
Of the four insurance ratings agencies, only A.M. Best and S&P gave ratings for AAA Insurance. Here is what their ratings indicate:
The AAA Insurance rating of A.M. Best is the third highest rating given by this insurance rating agency. The “A” rating signifies that AAA Insurance has an excellent ability to meet its ongoing insurance obligations to policyholders.
Companies that have this rating are considered financially strong, secure, and reliable, although not at the very top “Superior” (A++ or A+) levels. The “A” rating also reflects strong capitalization, solid operating performance, and prudent risk management.
As with the rating from A.M. Best, the “A” rating from S&P is also the third highest on their scale. This means that AAA Insurance has formidable financial security characteristics and is expected to have a strong capacity to meet its financial obligations. The “A” FSR was also an upgrade from “A-.”
However, this insurer is somewhat more susceptible to adverse business or economic conditions than higher-rated insurers with the AA or AAA rating from S&P. This rating also signifies that the company has a low risk of default and a solid financial foundation.
For a more in-depth look at how these insurance ratings agencies arrived at their results, you can check our guide to insurance rating agencies and their importance.
An interesting fact about AAA Insurance is that it is not a single national entity, but rather, is underwritten by various regional motor clubs. These clubs include:
Fitch and Moody’s did not provide any financial strength ratings for AAA Insurance, as they tend to focus more on rating larger, national companies. Obtaining financial strength ratings is not without cost; insurance companies request and pay for rating services. Some of the regional AAA insurers may not see a business need to buy ratings from all agencies, especially since their primary markets or stakeholders rely on the A.M. Best and S&P ratings.
|
Agency |
Rating |
Notes |
|---|---|---|
|
A.M. Best |
A (Excellent) |
Rating for most AAA-affiliated insurers |
|
Fitch |
Not rated |
- |
|
Moody’s |
Not rated |
- |
|
S&P |
A (Strong) |
For CSAA and other AAA-affiliated groups |
Like the FSR, AAA Insurance has credit ratings only from A.M. Best and S&P. These are the latest ICR for its largest underwriting entities, CSAA Insurance Group and Auto Club Group. Take note, ratings can vary slightly by region. For instance, the AAA insurance rating in California can be different from its rating in Florida. But in general, these are the most widely cited and current AAA Insurance ratings:
For A.M. Best, the issuer credit ratings they assessed for AAA is “a” (lowercase), which means the insurer has an excellent ability to meet ongoing senior financial obligations. This credit rating is consistent with its financial strength rating, since an “A” FSR would also mean the company has strong creditworthiness and low risk of default.
The “a” ICR was a recent upgrade from “a-.” AAA Insurance’s long-term outlook was also upgraded from “stable” to “positive.”
S&P assigned an ICR of “A,” which means "strong." As the rating implies, this connotes a strong capacity to meet financial obligations, although the company is slightly more susceptible to adverse economic conditions than insurers with higher ratings.
Summary table of AAA Insurance issuer credit ratings
|
Agency |
Issuer credit rating |
Meaning |
|---|---|---|
|
A.M. Best |
a |
Excellent ability to meet financial obligations |
|
Fitch |
No ratings |
No ratings issued by this agency |
|
Moody’s |
No ratings |
No ratings issued by this agency |
|
S&P |
A (strong) |
Strong capacity to meet obligations, low-risk, but lower than top-tier ratings |
So, what do these ratings mean for brokers and their clients? Here’s what they imply:
The FSR of “A” from both A.M. Best and S&P and an “a” and “A” ICR from A.M. Best and S&P, respectively, tell brokers that AAA Insurance is a stable, financially secure company.
These positive, high-tier ratings can help you justify its products to your clients, knowing that the company is highly rated for its solvency and claims-paying capacity.
Clients can trust that AAA Insurance can pay out their claims and remain solvent after honoring their claims. Another way of interpreting these FSRs and ICRs is that AAA Insurance can be trusted by your clients to keep a long-term business relationship with.
With these ratings, AAA Insurance can be depended upon and expected to weather adverse economic conditions. Also, these ratings provide reassurance that this insurer is both reputable and financially sound, with low risk of defaulting on claims.
AAA Insurance is available in nearly every US state, but coverage is provided by their different regional affiliates. Here is a summary list of states where AAA Insurance or its affiliates are available:
|
American Automobile Association affiliate |
States served |
|---|---|
|
Auto Club of Southern California |
Alabama, Arkansas, California, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Mississippi, Missouri, New Hampshire, New Mexico, Ohio, Pennsylvania, Texas, Virginia, Vermont, West Virginia |
|
Auto Club Group |
Florida, Georgia, Illinois, Iowa, Indiana, Michigan, Minnesota, North Carolina, North Dakota, Nebraska, South Carolina, Tennessee, Wisconsin |
|
California State Automobile Association (CSAA) Insurance Group |
Florida, Georgia, Illinois, Iowa, Indiana, Michigan, Minnesota, North Carolina, North Dakota, Nebraska, South Carolina, Tennessee, Wisconsin |
Some states, like California, Indiana, Ohio, Kentucky, Pennsylvania, Virginia, and West Virginia, have overlapping jurisdictions and are served by more than one AAA affiliate. Coverage may vary by county within some states. AAA car insurance is available in almost every state, but only via the local AAA club.
AAA Insurance, best known for its auto coverage and roadside assistance. There’s a wide range of auto insurance products on the market and AAA provides a good mix of these via its network of regional clubs and affiliates. While product availability can vary by state and club, AAA’s insurance products go well beyond auto insurance. AAA is a versatile choice for individuals and families seeking bundled protection. Its portfolio of products includes:
Product availability can vary by region and local AAA club. To know the most accurate product offerings, brokers are advised to check with your local AAA affiliate.
Apart from its broad portfolio of products, AAA insurance offers several distinctive products and add-ons that set it apart from other carriers, including:
AAA’s legendary roadside assistance is integrated with its auto insurance policies, providing members a range of services, including:
From our research, some customers found that these services are more reliable than those offered by other major auto insurance companies.
For instance, AAA Insurance’s towing service covers as much as 200 miles and is comparatively better than its closest competitor.
AAA offers specialized insurance coverage for travel in Mexico, a product not commonly available from most major US insurers. This is especially valuable for AAA members who frequently travel across the border.
AAA’s excess MedPay covers medical expenses after health insurance and standard MedPay limits are exhausted. This provides an extra layer of protection that is rare among AAA’s competition.
AAA offers perks like a disappearing deductible that reduces the deductible amount for each claim-free policy term. It also provides small claims forgiveness, which can help keep your clients’ premiums stable after minor incidents.
Beyond insurance, AAA membership includes discounts on travel, hotels, car rentals, shopping, and access to DMV services. This makes the overall value proposition broader than merely on insurance coverage.
AAA provides cover for collector cars, snowmobiles, ATVs, and RVs, catering to niche markets that may be underserved by other standard insurers.
The average costs of policies are important factors for deciding if AAA Insurance is worth considering. Here’s what our research found in terms of how much AAA insurance products cost and how they fare compared to national average costs:
|
Product |
AAA average cost |
National average |
Cost difference |
|---|---|---|---|
|
Auto insurance (full coverage) |
$2,415 |
$2,677 |
-$262 (10% less) |
|
Auto insurance (min. coverage) |
$657 |
$741 |
-$84 (11% less) |
|
Homeowners insurance |
$1,949 |
$2,508 |
-$559 (22% less) |
|
Term life insurance |
$96 (or $8/mo.) |
Varies; $15 –30/mo. |
Lower for basic term |
|
Membership fee |
$53 - $117/year |
n/a |
n/a |
AAA Insurance offers a wide range of discounts to help customers save on insurance rates. The specific discounts and eligibility criteria can vary by region and the AAA affiliate. The following are the most common and widely available AAA insurance discounts:
The sentiments from customers about AAA Insurance range from positive to mixed. Here’s what our research found:
Reliable claims services – many customers report that AAA handles claims efficiently and fairly, with fast processing and clear communication, especially for auto insurance claims
Competitive rates with bundling – customers who bundle auto, home, or renters' insurance with their AAA membership find the insurance quotes and rates competitive and appreciate the extra savings. You can also use our guide to RFQs to make comparisons and find more competitively priced policies.
Roadside assistance perks – roadside assistance is a major draw; many customers find it a highly valuable and reliable benefit
Local agent support – some customers appreciate the ability to work with local agents and the personalized customer service that comes with it
Premium increases – some customers mention that rates can increase significantly after claims or over time, particularly for drivers who have traffic violations or accidents
Inconsistent customer service - because AAA is made up of regional clubs, customer service experiences can vary widely depending on location. Some customers report difficulty reaching agents or getting consistent answers
Mixed comments on claims satisfaction and communication – although many customers report positive claims experiences, others mention delays or challenges in communication, especially in regions with less responsive affiliates
Data analytics and consumer intelligence company J.D. Power reports that AAA Insurance’s regional affiliates rank above average in some areas for claims satisfaction but below average in others.
AAA Insurance typically receives average to above-average scores in Consumer Reports’ annual surveys.
Customers rate AAA highly for claims satisfaction, ease of reaching an agent, and policy review clarity.
Scores for premium prices and overall value, however, are rated by Consumer Reports as average. The entity also notes that AAA’s claims process is generally smooth, but satisfaction can vary by regional affiliate.
Looking at the statistics, customer reviews, pricing, discounts, insurance rankings, and other factors, the answer is not a clear-cut yes or no. AAA Insurance is a good option for clients who will use the membership benefits, bundling discounts, and need excellent roadside support.
However, AAA is not always the best low-cost option for price-sensitive buyers. Should your clients want more options, they can use our guide to find cheaper car insurance or to lower their insurance quotes.
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