Does Your Insurance Policy Have a Safety Net?
by R&I Consultants
“Admitted” vs. “Non-Admitted” paper
When seeking insurance coverage, the consumer may be offered a policy from a “non-admitted” carrier, or a policy designated as “surplus lines”. The agent must disclose this as it is most certainly different from an “admitted carrier” or “standard paper”. So, what is the difference between the two? What does each mean for my policy? How am I going to be affected?
Admitted insurance companies are those that are regulated and licensed by the state’s Department of Insurance. This means that all rates, forms and coverages that the company issues have been reviewed and approved by the state. This may be seen as a plus to many customers, because the state is therefore responsible to ensure that the best interests of the policyholder are protected. Also, if an admitted carrier were to become insolvent, the state guarantee fund covers claims of the policy holders that the carrier can no longer pay.
Non-admitted insurance companies are not regulated by the state’s Department of Insurance. This is ideal for those companies with complex or hard-to-place risks that can’t get coverage through a standard (admitted) carrier. These policies tend to be specifically tailored to the policyholder’s needs, but these carriers are under no regulation or review process in setting rates and premiums. The most important caution an agent should educate their customers on, is that non-admitted insurance companies are not protected under their states’ guaranty funds, therefore claims will not be paid in the case of insolvency.
If you’re you want to learn more about admitted vs. non-admitted paper, talk with one of our commercial insurance consultants. If your risk requires non-admitted paper, we can handle it through one of our surplus lines brokers. All surplus lines brokers must be licensed by the state. All agents are required to attempt to place your business with admitted insurers prior to accessing the surplus lines market.
Call Risk & Insurance Consultants at 404-459-5975 to learn more about admitted and non-admitted insurance carriers.