What’s the Difference Between Admitted and Non-Admitted Insurance Carriers

CauseWell Insurance Services is happy to help customers who can’t acquire insurance in the normal ways, but there are pros and cons.  It’s helpful to know the distinction between an “admitted” carrier and a “non-admitted” carrier in the context of insurance. Here are the key differences:

  1. The difference between admitted and non-admitted insurance carriersRegulatory Oversight:
    • Admitted Carriers: These insurance companies are licensed and regulated by insurance departments within the state (In California, it is the CA Department of Insurance). They must comply with all state regulations regarding insurance, including rates, policy forms, and solvency standards.
    • Non-Admitted Carriers: Also known as “surplus lines” insurers, these companies are not licensed by the state of California. They are often used for unique or higher-risk coverage that admitted carriers do not offer. While the state does not regulate them in the same way, they are still subject to certain oversight and must be approved to do business in the state.
  2. Protection under State Guarantee Fund:
    • Admitted Carriers: In California, policyholders are protected by the California Insurance Guarantee Association (CIGA), which provides a safety net in case the insurance company becomes insolvent. This means claims will still be paid up to a certain limit.
    • Non-Admitted Carriers: Policies issued by non-admitted carriers are not covered by CIGA. If a non-admitted carrier becomes insolvent, policyholders may have no recourse to recover their claims.
  3. Rate and Form Flexibility:
    • Admitted Carriers: The state must approve Rates and policy forms, often resulting in less flexibility but more consumer protection.
    • Non-Admitted Carriers: These carriers have more flexibility in setting rates and designing coverage, which can be beneficial for unique risks but may also lead to higher rates and less standardization.
  4. Market Focus:
    • Admitted Carriers: Typically focus on standard, more common insurance products suitable for the majority of consumers and businesses.
    • Non-Admitted Carriers: Often cater to specialized markets or higher-risk situations that standard carriers avoid, like properties in high-risk wildfire areas or unique business risks.
  5. Method of Access:
    • Admitted Carriers: Generally accessed directly or through insurance agents and brokers.
    • Non-Admitted Carriers: Usually accessed through licensed surplus lines brokers who specialize in non-standard insurance.

Understanding these differences is important , especially when seeking coverage for risks that are not typically covered by standard insurance policies. That’s why it is important to work with a knowledgeable insurance professional who can guide you through the process of choosing the right carrier for your specific needs.

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