Non-Admitted Insurance
What Does Non-Admitted Insurance Mean?
Non-admitted insurance refers to policies sold by insurance companies that have not been approved by the state insurance department where the policies are offered.
Since non-admitted insurers are not subject to state regulations, including those governing pricing, they have greater flexibility in their product offerings. However, this comes with a risk for policyholders, as they cannot seek assistance from the state if the insurer becomes insolvent.
Insuranceopedia Explains Non-Admitted Insurance
Although non-admitted insurance products are not approved by the state insurance commission, they are still regulated by the state’s surplus lines department.
The primary drawback of purchasing a product from a non-admitted insurer is that, in the event of the company’s bankruptcy, the state will not intervene or provide compensation to its clients.
Despite this risk, customers may choose non-admitted insurance products due to their advantages. These policies often offer lower rates and can cover unique or specialized risks that admitted insurers may decline to insure.
