The reality is that the financial health of the company and its operating record in the state where you live are far more important guideposts than whether it's a stock or mutual company. There are small nuances, though. Here are the differences.
* Stock insurance firms. These companies are owned by one or more investors. When the company makes money, the investors may receive a portion of the profits in the form of a dividend. The company's stock may be traded on a stock exchange. As a policyholder, you do not get to share in the profits.
* Mutual insurance companies. These companies are owned by the policyholders. Thus, when you purchase auto insurance from a mutual company, you become a shareholder of that company. You get to share the profits when there are profits.
Most insurance companies are stock firms. Examples are: Allstate, CNA, and Zurich American.
