An admitted insurance company has met regulations set by a state’s department of insurance (DOI), whereas a non-admitted insurance company has not met those requirements.
What are admitted and non-admitted insurance companies?
An admitted insurance company is backed by the state, which means:
- The insurance company (also called carrier or provider) must comply with the regulations set by your state's department of insurance (DOI) or insurance commissioners.
- The state will verify that the carrier’s insurance policy forms, rates, and requirements adhere to state insurance laws and regulations before allowing it to sell in your state.
- If the admitted insurance company fails financially, the state will step in to make payments on claims as necessary.
A non-admitted insurance company isn’t approved by the state, which means:
- The insurance company does not necessarily comply with state insurance regulations.
- If the insurance company becomes insolvent, there is no guarantee that claims will be paid, even if the case is active at the time of bankruptcy or financial failure.
- If policyholders think their case was handled improperly, they can’t appeal to the state DOI.
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Are admitted or non-admitted insurers better for business owners?
There are situations when both admitted and non-admitted insurance coverage may be beneficial for business owners, depending on the types of insurance needed.
The benefits of admitted insurers
An admitted insurer, also called a standard market carrier, is an insurance company that has been approved by a state’s department of insurance.
For business owners, buying from admitted companies means three things:
- You don’t have to pay various fees and taxes when you purchase an insurance policy because the company’s status makes those expenses unnecessary.
- If the company fails for some reason (e.g., claims after a natural disaster deplete its reserve of funds), the state’s guarantee fund will step in and cover your claims.
- If you think your insurance agent or insurance company handled a claim improperly, you can appeal the decision to the state insurance department.
If the admitted insurance company fails financially, the state will step in to make payments on claims as necessary.
The benefits of non-admitted insurers
Non-admitted insurers, also known as carriers, sell policies that aren’t backed by your state. While they don’t fall under traditional insurance regulations, many states do regulate non-admitted carriers.
These regulations are usually less strict than those followed by admitted insurers. As a result, non-admitted insurers have more flexibility when it comes to:
- Designing coverage
- Insuring risks
- Selling insurance policies
This typically means they can insure complicated specific risks that the standard insurance market won’t cover. For example, if you own amanufacturing business that has a facility located along the Gulf Coast, or in an area known for brush fires, it may be difficult to find an admitted insurer to cover property damage from a hurricane or wildfire, respectively.
Similarly, many contractors in New York have to obtain liability insurance policies through non-admitted insurance companies due to the high risk of construction-related lawsuits in the state.
In addition to admitted and non-admitted status, insurance companies are given letter grades from A++ to F, from best in class to worst. These grades are calculated by the credit rating firm A.M. Best, which has been rating insurance companies since 1906.
A non-admitted insurance company with a high grade is most likely a solid bet for your insurance needs, while an admitted carrier with a C rating or below could be risky.
Insureon works only with top-rated insurance companies to help business owners find the appropriate coverage at affordable rates.
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A certificate of insurance (COI) provides proof of insurance coverage. To acquire a COI, you must first buy a small business insurance policy.
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Updated:
October 14, 2023
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FAQs
A non-admitted insurance carrier doesn't have to follow the same underwriting model as admitted carriers. The same goes for rate setting and coverage. With different underwriting criteria, non-admitted carriers can often offer better or more affordable coverage than admitted carriers.
What is the difference between admitted and non-admitted insurance companies? ›
How do admitted and non-admitted insurance companies differ? If an insurance company is admitted, it means they've met the regulations set by the state Department of Insurance (DOI) in the areas they work. In comparison, non-admitted insurance carriers have not met their state's requirements.
What is considered a nonadmitted insurer? ›
Non-admitted insurers, also known as excess and surplus (E&S) lines carriers, sell policies that aren't backed by your state. While they don't fall under traditional insurance regulations, many states do regulate non-admitted carriers. These regulations are usually less strict than those followed by admitted insurers.
What is the difference between domestic and admitted insurer? ›
The primary difference between admitted and non-admitted insurance carriers is that admitted companies are licensed in the states where they provide coverage. In contrast, domestic non-admitted insurers only maintain licenses in the states where they're domiciled.
Is next insurance admitted or non-admitted? ›
NEXT is an admitted carrier and A- rated by A.M. Best.
What is the difference between being admitted and accepted? ›
When you're admitted, it means a school or organization has allowed you to enter. It's like getting a key to the door. On the other hand, being accepted is more about being welcomed or approved by a group or community. It's like they're happy to have you and want you there.
What are admitted and non-admitted assets? ›
In general, authorized investments that are within the limitations of the laws and regulations of the various states are considered to be admitted assets. Investments exceeding the limitations, or those of questionable quality, may be nonadmitted.
Is Progressive an admitted carrier? ›
Admitted Insurance Companies: Explained
Admitted insurance companies are those that file with the state they are doing business in which means they are subject to many laws to protect the people doing business with them. An example would be Progressive or Nationwide, a company that everyone knows and usually trusts.
Is Lloyd's of London an admitted carrier? ›
Lloyd's of London Example
An excellent example of a respected non-admitted insurance carrier is Lloyd's of London. Technically, Lloyd's is a syndicate rather than an insurance company, and yet they're one of the world's largest insurance providers.
Which of the following places insurance with a non-admitted insurer? ›
A Surplus Line Broker is a person who places insurance with non-admitted insurers, covering risks other than aircraft and certain marine and transportation risks.
What are the different types of homeowners insurance?
- Dwelling coverage is the basis for all homeowners insurance policies. ...
- Contents coverage protects items including furniture and clothing in your home.
An insurance company founded in New York, operating in New York, and following the insurance statutory laws of New York is an example of a domestic insurer in the state of New York. A company that has headquarters in Texas but has a license to sell insurance products in New York is called a foreign insurer.
What are the two most common forms of insurance company ownership? ›
Insurance companies are classified as either stock or mutual depending on the ownership structure of the organization. There are also some exceptions, such as Blue Cross/Blue Shield and fraternal groups which have yet a different structure.
What is admitted vs non-admitted insurance? ›
Understanding Admitted and Non-Admitted Insurance Companies
The term “admitted” simply refers to whether or not an insurance company has been licensed by a particular state. An insurance company can be admitted in State A, but non-admitted in State B.
Is AmTrust an admitted carrier? ›
AmTrust E&S is committed to the wholesale market and subscribes to a limited distribution model. Our products and services are available only through a select number of licensed and contracted Excess and Surplus brokers. Coverage is offered on a non-admitted basis in all 50 states and the District of Columbia.
Is American Modern Insurance an admitted carrier? ›
(NAIS) has added American Modern Insurance Co. as another new admitted carrier for personal lines. “We are pleased to make this admitted carrier available to our California brokers.
What does it mean for an insurance company to be admitted? ›
An “admitted carrier” in California is an insurance company that has been filed and approved by the California Department of Insurance (DOI). This means they are subject to all state regulations, and cannot deviate from their filed rates.
Is a non-admitted insurer bad? ›
Coverage. Many individuals are put off by the “non” in non-admitted, assuming it means inadequate coverage. But an admitted carrier doesn't necessarily have better coverage than a non-admitted one, especially not based on status alone. Instead, the opposite is true.
Why would an agent recommend a non-admitted policy? ›
Non-admitted companies can provide more flexible premiums and will be more willing to provide coverage for high-risk situations.
