Admitted vs. non-admitted insurance companies
In short, an admitted insurance company, often called a “standard/preferred company” has been approved by a state’s insurance department, whereas a non-admitted insurance company, often called a “non-standard company or” or “excess and surplus line company” is not backed/regulated by the state.
What are admitted and non-admitted insurance carriers?
An admitted insurance company is backed and regulated by the state, which means:
- If you have a concern about the insurance company (for example, the way they are handling your claim), you can ask the state insurance department to look into your concern.
- The insurance company must comply with the rules and regulations set by their state’s department of insurance.
- If the insurance company fails financially, the state will step in to make payments on claims as necessary.
A non-admitted insurance company is not approved by the state, meaning:
- If policyholders think their case was handled improperly, they can’t appeal to the state insurance department.
- The insurance company can set rates and policy details without needing approval from the state
- 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 the bankruptcy or financial failure.
What are some other differences between admitted and non-admitted insurance policies?
Many times, non-admitted policies require premiums that are paid in full for the year, so no payment plans are available. That is why larger non-admitted policies are often financed, which means that you are essentially borrowing money from a third-party, which in return pays the insurance company in full. If that is the case, you can expect to pay about 10% in interest.
Even though non-admitted policies exist to help hard-to-insure risks, sometimes insurance agents sell them to clients even though an admitted policy is available. As an insurance agent, we are required, by law, to check with at least three standard insurance companies before trying to sell a non-standard insurance policy.
Before purchasing an insurance policy that reads “Non-Admitted” on the quote, ask your agent the following questions:
- Did you check your admitted carrier markets for quotes for me?
- What is the financial rating of this insurance company?
- If I cancel after a few days, how much money will not be refunded?
- How does the process look for making policy changes?
- Does the insurance company handle their own claims or do they hire a third-party?
A: 1500 Benson Road South, Suite 201 Renton, WA 98055
Dominik was a German exchange student in high school before graduating from the University of Washington in Business Administration – Information Systems and Retail Management. His insurance career started in 2008 when he decided leave his retail management career behind to start his own business. His American Family Insurance agency quickly grew to service 700 clients and families. While the idea of becoming an independent broker started in 2010, a horrific car accident put that plan on hold. In 2014, Dominik and his wife Michele changed from a captive agency to become the independent agency that you see today.
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