What Is the Difference Between Admitted and Non-admitted Insurance Carriers?

Typically insurance can feel overwhelming with the sheer number of coverage options for us to choose from. But what if your options are instead limited due to high risk exposures? Then you likely will need to know all about non-admitted insurance carriers. 

At Berry Insurance we work with numerous clients to secure coverage after they find it difficult to be insured through standard insurance carriers. This is when we may turn to working with non-admitted carriers as our next course of action. 

If you’ve recently been told to consider non-admitted carriers yourself, you may be wondering how they differ from admitted carriers and if it’s really the best option for you. Keep reading to learn how these types of carriers are different, as well as their pros and cons. 

Table of contents: 

• How do admitted and non-admitted carriers differ? 
• What are admitted carriers?
• What are non-admitted carriers? 

How do admitted and non-admitted carriers differ?

When an insurance company is admitted, it means they’ve met the regulations set by the state Department of Insurance in the areas that they are licensed to insure.

Non-admitted insurance carriers have instead not met these state requirements, and are thus not licensed by the state. This means that they typically do not follow the same regulations that admitted carriers do. 

What are admitted carriers? 

Admitted insurance companies are licensed by their state’s insurance department. Because of this, these carriers must comply with their state’s regulations. The state will also verify the carrier’s policy forms, rates, and requirements. 

What are the advantages and disadvantages of working with admitted carriers?

Since admitted carriers are overseen by the state, working with them will offer you more consumer protections. Admitted carriers must adhere to their state’s laws and regulations, including those regarding rates, policy language, and how they handle claims. These protections also provide you with the option to appeal a decision with your state’s department of insurance if you believe the insurance company mishandled your claim. 

In addition to that, working with admitted carriers guarantees you claims will be covered through the state’s guaranty fund if the insurance company fails. Most states have guaranty funds to act as a safety net for policyholders when carriers become insolvent - usually offering additional protections up to $500,000. 

While admitted carriers provide you with more protection, they often suffer from limited underwriting and pricing flexibility - which may be a problem if you come attached with a high level of perceived risk to insurers. Potential policyholders who are identified as high risk will deal with limited policy options, higher premiums, or be denied coverage altogether. 

What are non-admitted carriers? 

Non-admitted carriers (also referred to as surplus lines insurers), while not state licensed carriers, can still provide coverage for perils - especially to policyholders who admitted carriers may decline due to risk. 

With the lack of state oversight, non-admitted carriers operate under less stringent guidelines, allowing them to specialize in high-risk or custom insurance needs. 

What are the advantages and disadvantages of working with non-admitted carriers?

The benefit of working with non-admitted carriers is that they offer more flexibility and options when choosing coverage.

Since non-admitted carriers are not as heavily regulated by the state, they can usually offer you specialized coverage for risks that would otherwise be difficult (or impossible) to insure with admitted carriers. 

Examples of risks admitted carriers would be on the look out for include properties near fault lines, those located in heavy flood zones, near coastal regions, harsh weather conditions, or exposed to other high risk hazards. 

However, while non-admitted carriers are a great option for those that may be denied coverage through admitted carriers, their lack of regulatory oversight means policyholders will have less protections - such as access to guaranty funds or the ability to appeal any claim decisions. In addition to this, policies from non-admitted carriers will often come with a higher price tag since they are usually offering high-risk coverage for increased exposures. 

Assessing your options

No matter your circumstances, it is always good to know you have options - especially when it comes to your insurance. So, even if you’ve found it difficult to receive coverage from admitted carriers, non-admitted carriers may be the perfect choice for your insurance coverage. 

Want help discussing your coverage options? Our team is happy to help! Reach out today discuss your level of exposure and insurance coverage options. 

Having difficulty insuring your home? You may need FAIR plan insurance. Learn more about this type of coverage we turn to as a last resort for high risk properties: Is FAIR Plan Insurance Right for You?