Admitted vs. Non-Admitted Insurance
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
- If the insurance company fails financially, the state will step in to make payments on claims as
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
- 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?
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Renton, WA 98055