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Admitted carriers and non-admitted carriers

Understanding different regulations and different coverage.

What are admitted carriers and non-admitted carriers?

In the most simplistic terms, an “admitted” insurance provider has been approved by a state’s Department of Insurance, and a “non-admitted” carrier has not.

While this simple definition might make non-admitted carriers seem less legitimate, both admitted and non-admitted carriers are regulated, though by different offices. And both have their benefits depending on your business and what you need to insure.

The benefits of admitted insurance carriers

Admitted carriers have to go through a fairly long and drawn-out process to get approval in the states where they sell their policies. The state needs to verify that the carrier’s insurance policy forms, rates, and requirements all follow state insurance laws and regulations before allowing them to sell the policy.

Because they must follow these strict guidelines to get approved, admitted carriers don’t have much flexibility in writing their policies. They can’t get creative with what and who they can insure.

However, once admitted carriers jump through these hoops, the state now backs the policy. That means if the insurer goes out of business or becomes insolvent, the state’s insurance department steps in to pay claims, up to a set limit.

In addition, if you feel your claim was improperly handled or disagree with an admitted carrier’s claims decision, you can appeal that decision to the state’s insurance commissioner. They have the power to overrule an admitted carrier’s decision.

The benefits of non-admitted insurance carriers

Non-admitted carriers are not regulated by the state Department of Insurance, but rather by the Surplus Lines Offices1. This is why non-admitted carriers are sometimes called “surplus lines carriers” or “surplus lines insurers.”

The regulations of a state Surplus Lines Office are far less strict than those of the Department of Insurance. Because they don’t need their policies to be approved by the state, non-admitted carriers have much greater flexibility regarding pricing and products.

Many small business owners obtain their general liability insurance from admitted carriers, but use non-admitted insurance companies for risks too difficult or expensive to place through their regular provider.

For example, say your business is located in an area prone to specific risks, like hurricanes or wildfires. You might need to insure these risks with non-admitted carriers because admitted carriers simply won’t be able to offer that coverage.

In addition, non-admitted carriers can get creative with their policies. One of the most famous non-admitted insurers in the world is Lloyd’s of London. They’ve insured everything from Troy Polamalu’s hair to David Beckham’s legs2.

You may not have a million-dollar head of hair, but if your business relies on a specific and expensive piece of equipment to be in business, chances are a non-admitted carrier is the only way to get it insured.

The bottom line: both carriers serve small business needs

The thing to keep in mind about admitted and non-admitted carriers is that one isn’t “good” while the other is “bad.” They both have their place when it comes to serving the needs of small businesses.

“Admitted” and “non-admitted” are just administrative designations in the insurance industry, and can’t tell you about the overall quality of the insurance products or the stability of the carrier offering it. The carrier you choose should be the one that offers you the insurance coverage that’s best for your business.

Get the coverage you need with NEXT

At NEXT, we’re 100% dedicated to small businesses. That’s why we offer customized policies to get you the best coverage for your business.

With small business insurance from NEXT, you’ll have the confidence to take risks and get your small business to the next level.

You can start a quote, customize your options and access your certificate of insurance online immediately — in about 10 minutes.

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* To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.
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