Admitted Insurance Companies vs Non-Admitted Insurance Companies
Admitted vs Non-Admitted Insurance Companies, what is the difference? When I first entered the Insurance Industry in the 1990s I thought that it was more advantageous to use an insurance company which is ‘admitted’ vs. one that is “non-admitted”. Sounds logical, right? Elect an insurance company that is “admitted in the state you are operating in which means:
Admitted
Filed with and subject to the laws and regulation of the state they are admitted in. Also, means that in the event of insolvency the state WILL step in and make good on claims and premium remuneration if applicable (Simplified version).
Admitted insurance companies are licensed to do business in the state where they operate. This means that they have met certain financial and regulatory requirements set by the state. Admitted insurance companies are also regulated by the state, which means that they are subject to certain oversight and consumer protections.
There are a few advantages to using an admitted insurance company. First, admitted insurance companies are typically, but not always, more financially stable than non-admitted insurance companies. This is because they are subject to more stringent financial requirements. Second, admitted insurance companies are regulated by the state, which means that they are subject to certain consumer protections. This can give you peace of mind knowing that your insurance company is following the rules.
Non-Admitted
Not filed with and subject to the laws and regulation of the state they are admitted in. Also, means that in the event of insolvency the state WILL NOT step in and make good on claims and premium remuneration if applicable (Simplified version).
Non-admitted insurance companies are not licensed to do business in the state where they operate. This means that they have not met the financial and regulatory requirements set by the state. Non-admitted insurance companies are also not regulated by the state, which means that they are not subject to certain oversight and consumer protections. This allows them to provide coverages for risks that many, or often most, admitted insurance companies will not offer coverage for. In fact, there are several non-admitted insurance companies parented by admitted insurers to allow them to address risks that do not fir into the admitted insurance sector. They include: Chubb, Travelers, Hanover, Nationwide, and Markel.
There are a few disadvantages to using a non-admitted insurance company. First, non-admitted insurance companies are typically, but not always, less financially stable than admitted insurance companies. This is because they are not subject to the same financial requirements. Second, non-admitted insurance companies are not regulated by the state, which means that they are not subject to certain consumer protections. This can leave you vulnerable if something goes wrong.
Admitted vs Non-Admitted Insurance Companies: which is better?
Beware, there are Companies ‘Admitted’ to do business in the State you are operating in that may carry a “B” or worse rating that are on the brink of bankruptcy. If they do fold you may wait YEARS to be refunded money you are owed. Also, you ,ay held up in legal battles if you are in the middle of a suit at the time of bankruptcy. Also, many Mortgage Companies, Home Owners, Business and Build Owner will not offer you a mortgage or let you work on their property with a ‘B’ carrier or worse.
Additionally, there are ‘Non-Admitted’ carriers that have ‘A’ and better ratings, as high as ‘A++’ with tens of billions of dollars in the bank that are nowhere near bankruptcy.
If available and an option, take the better company with the bigger financial strength.
Differences Between Admitted vs Non-Admitted Insurance Companies
There are a few key differences between admitted and non-admitted insurance companies. These differences include:
- Licensing:Admitted insurance companies are licensed to do business in the state where they operate, while non-admitted insurance companies are not.
- Regulation:Admitted insurance companies are regulated by the state, while non-admitted insurance companies are not.
- Financial stability:Admitted insurance companies are typically more financially stable than non-admitted insurance companies.
- Consumer protections:Admitted insurance companies are subject to certain consumer protections, while non-admitted insurance companies are not.
Admitted vs Non-Admitted Insurance Companies and they risks they insure
Admitted insurance companies will typically insure more conservative risks. They include main street restaurants, retail stores, claim free real estate, low risk homes, and commercial vehicles. Non-Admitted insurance companies are almost exclusively the option for higher risk lines. Those include infant products, night clubs, dietary supplements, sporting goods, distresses properties, physical damage coverage for high risk commercial autos.
Admitted vs Non-Admitted Insurance Companies: Which is Right for You?
The best type of insurance company for you will depend on your individual needs and circumstances. If you are looking for a company that is financially stable and regulated by the state, then an admitted insurance company may be the best option for you. However, if you are looking for a company that offers lower premiums, that in willing to insure certain risks, then a non-admitted insurance company may be the only option.
Ultimately, the decision of which type of insurance company to use is up to you. Be sure to do your research and compare different companies before making a decision.
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Castle Rock Capacity Insurance Agency – Commercial General Liability
Admitted vs. Non-Admitted Insurance Companies
