Admitted vs. non-admitted insurance carriers: What's the difference?

When it comes to buying insurance, you can purchase a policy from an admitted insurance company or a non-admitted insurance company. Both types of carriers sell insurance products to businesses and individuals; however, they have a few key differences:

• Admitted carriers are state-licensed, compliant with state regulations, and backed by state guaranty funds.
• Non-admitted carriers aren't state-licensed or backed by state guaranty funds but legally operate through surplus lines to provide coverage for high-risk, unique, or harder-to-insure risks.

There are many legitimate, financially stable admitted and non-admitted insurance carriers—you just need to choose the one that fits your business's risk profile.

Luckily, you don't have to decide on your own. Insureon's licensed insurance agents have industry expertise and in-depth knowledge of small business risks to help you identify the right coverage options.

An admitted insurance carrier is approved and licensed by your state's department of insurance (DOI). This means the insurance company complies with strict state insurance regulations and has its policy forms, rates, and financial stability verified by the state.

Admitted insurance carriers provide many consumer protections and benefits, including:

• State guaranty fund protection: If an insurance company becomes insolvent, the state's guaranty fund helps pay valid claims.
• Regulatory oversight: The state DOI has authority over admitted carriers, giving consumers a formal complaint and claims dispute resolution process if issues arise.
• Standardized policy language: Admitted carriers provide familiar coverage structures that are easier to compare and understand.

There are a few potential drawbacks to admitted insurance providers, such as:

• Less flexibility in coverage options for unusual risks
• Slower adaptation to emerging industries
• Coverage restrictions for high-risk businesses
• Some businesses may be declined coverage entirely

A non-admitted insurance carrier, often called an excess and surplus (E&S) lines carrier, is an insurance company not licensed in the state where the insured risk is located, and therefore isn't bound by that state's rate and form filing requirements.

But non-admitted doesn't mean non-regulated. Excess and surplus lines insurers must sell through surplus lines brokers in states where they're not licensed. These specialized insurance brokers are licensed and regulated by state surplus lines offices, which place high-risk or specialty coverage with non-admitted carriers.

Because they operate under fewer state insurance laws, non-admitted carriers can offer benefits such as:

• Greater customization: Coverage can be tailored to more types of risk, rather than fitting into standard policy forms.
• Underwriting flexibility: It's easier to get coverage for companies with very high or unique risks and extensive claims histories.
• Faster access to coverage: Businesses in new and emerging industries can get coverage where standard policies and premiums haven't been established.

Non-admitted carriers can also pose some challenges, namely:

• No state guaranty fund protection if an insurer runs into financial trouble
• Premiums typically include surplus lines taxes and fees
• Specialized policies often carry less standardized language, making it harder to compare and understand quotes
• Greater responsibility on the buyer's part to evaluate the insurer's financial stability, often using a ratings firm like A.M. Best

In most states, surplus lines brokers must perform a diligent search before they can place coverage with a non-admitted carrier. To meet this requirement, they must prove admitted insurers were offered and declined the risk before writing the policy.

Non-admitted insurance is generally legitimate and safe when you purchase coverage from a carrier that's highly rated and financially strong. To determine whether a non-admitted insurance company is safe to work with, you should consider:

• A.M. Best ratings: Look for carriers with a rating of A- or higher, which signals strong financial strength and a solid ability to pay claims.
• Industry reputation: Assess how long a carrier has been in business and whether it specializes in your type of risk.
• Claims handling history: Ask your broker about the carrier's claims history, including its average time to pay and how it has handled disputes.
• Professional guidance: Work with a licensed broker who can vet carriers on your behalf.

You can tell if an insurance carrier is admitted or non-admitted by doing one of the following:

• Search the official database on your state's DOI website for an active license or certificate of authority under that specific insurance company name.
• Ask your insurance agent or broker of record, who can quickly identify a carrier's status.
• Check the first page of the policy or quote for a surplus lines disclosure notice and review all policy documents for any mention of special state taxes or stamping fees.

Insureon's online marketplace and insurance agents are licensed in all 50 states. We help navigate admitted and non-admitted markets and provide coverage recommendations based on your small business's risks, industry, and unique needs.

We'll help you find quality, affordable insurance with these easy steps:

• Submit one online application that will reach 100+ top-rated insurance carriers.
• Compare quotes online and select the right policies.
• Get coverage and your certificate of insurance (COI), typically within 24 hours of applying.

When you work with Insureon, you're not just getting a policy. You're getting a partner that will help keep your business protected.