Few things could be worse than paying a pretty large check to your insurance company every month, only to have them not be there when you need help with a claim. All your premiums; poof! Out the window. Thankfully, there a signs of financial trouble you can watch out for, possibly giving you time to switch to a different company.

Here are some telltale warning signs that could mean your insurer is on thin ice.

A.M. Best status declines –
In my post on the top rated auto insurance companies, I explained how the firm A.M Best ranks insurance companies on financial security. This is  a great place to start. If your firm’s AMB rating begins slipping, especially if it falls under “A” status, you should be wary.

Customer service takes a sudden turn for the worse -
It is pretty standard in these days of declining bottom lines for customers to wait on hold. In fact many times you’re not even able to speak with a live person. That should not  be that case at your auto insurance provider, however. If you need to chat with a real, warm body, you should be able to get one. If you can’t, or it takes a long time, that is a sure sign of staff cuts in customer service. This may mean they are slashing payroll, traditionally one of a service company’s largest expenses. The bottom line; if you wait for more than 10 minutes on hold, start thinking about what’s going on down at the farm.

Sudden, massive premium increases
Like banks, insurance companies are required by law to keep a certain amount of cash reserves on hand to fund claim payments. If their cash on hand begins to decline, they have only one way to increase it; increase revenue, and fast. To do this they can increase their number of insured or they can generate more revenue from their existing customers. A small rate increase is just business as usual, but a large one, say 40% or more should give you cause for concern. Not that seeing such a large premium increase wouldn’t have you shopping around for a new insurance company anyway, but it can definitely be a warning sign of impending trouble.

Late claim payments –
Any time the company gives you the runaround, or is late paying a claim, it should give you cause for concern, (unless, I have heard, you live in Michigan, where it may be the standard practice for insurance companies when dealing with “No Fault” claims). As a rule, if it takes 90 days to get your check, that is not good.

These are some things to look out for if you want to be sure your company isn’t one of the over 600 insurance companies that have bit the bullet in the last 25 years. If yours does go under, you will be paid through a government program, much like the FDIC protects you bank deposits.

As with anything, you should be vigilant, especially in these turbulent times.