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What Are Admitted vs Non-Admitted Insurance Carriers?

Admitted vs Non-Admitted Insurance Carriers

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Buying insurance is one of the best ways to maintain the financial stability of your small business. Therefore, when it comes to choosing a provider, it’s important to know as much about your future insurer as possible. Insurance companies, like all businesses, are not immune to insolvency or bankruptcy. That’s why it’s essential to know how you will be affected if your insurance company can’t pay your business the money that it’s owed. Knowing whether your insurance provider is Admitted or Non-Admitted to your state can help you make a more informed decision.

What is an Admitted Insurance Carrier?

Admitted Insurance Carriers are licensed and supported by the state government and are subject to strict regulations and oversight by the state’s insurance department. If your insurance carrier is unable to pay out your policy due to bankruptcy or insolvency, the state will step in and pay you the money you are owed.

What is a Non-Admitted Insurance Carrier?

Non-Admitted Carriers, often called “surplus line carriers,” or “excess and surplus lines,” on the other hand, are not supported by state guaranty funds and not officially licensed by the state’s insurance department. They are, however, approved by the state’s surplus lines office to operate within the state. Non-Admitted Carriers face far less regulation than Admitted Carriers, allowing them to move faster in some cases and agree to unusual or high-risk policies that Admitted Carriers may not be able to offer. The downside to using these carriers is that your business will not receive any insurance payment if the carrier becomes bankrupt or insolvent.

Both Admitted and Non-Admitted Insurance Carriers can offer you affordable and reliable insurance coverage if they are rated as being financially stable by an insurance rating organization like Moody’s, Standard & Poor’s, or A.M. Best.

Benefits of Admitted Insurance Carriers

Admitted Insurance Carriers offer more formal benefits than those offered by Non-Admitted ones, with the biggest benefit being that Admitted Insurance Carriers are supported by state guaranty funds. Benefits of using an Admitted Insurance Carrier include:

Benefits of Non-Admitted Insurance Carriers

Non-Admitted Insurance Carriers have the freedom to offer a wider range of insurance plans. Some may even allow you to create a customized policy. Non-Admitted Insurance Carriers have more leniency because they aren’t required to go through a lengthy state approval process. You may also be able to negotiate a reduced rate for your policy.

A common misconception of Non-Admitted Carriers is that they are inherently more risky than Admitted Carriers. Non-Admitted Insurance Carriers, however, can often be more reliable than their Admitted counterparts. For example, Lloyd’s of London is a well-known insurance company that operates in the United States without being Admitted. Lloyd’s often receives triple A ratings from well-known insurance rating organizations for their reliability and creditworthiness.

Ultimately, the risk of choosing a Non-Admitted or Admitted Carrier boils down to creditworthiness and financial strength of the carriers themselves. Always make sure to check with insurance ratings from reputable organizations like A.M. Best to assess the financial stability of a carrier.


Benefits of choosing a Non-Admitted Carrier include:

Who should use a Non-Admitted Insurance Carrier?

You should use a Non-Admitted Carrier if the plan you need is considered “high risk” by the state and you can’t find insurance through an Admitted Insurance Provider. Admitted policies differ from state to state. If you operate in multiple states, you may be able to receive Admitted Insurance in one and use Non-Admitted Insurance in the other. You might also use a Non-Admitted Carrier if your business does not meet certain requirements for eligibility.


Remember that you can purchase more than one insurance policy. If you can fulfill the majority of your needs through an existing plan offered by an Admitted Insurance Carrier, it’s in your best interest to do so and request an additional Non-Admitted add-on plan.

Examples of policies that are often covered through Non-Admitted Insurance Carriers include:

Limits of State Guaranty for Admitted Insurance Carriers

Though the state will step in to cover insurance policy claims when an Admitted Carrier becomes insolvent, they cannot always afford to cover the entire claim. The difference between the government’s funding and the pay out your business expects can be drastic. Many states set aside a guaranty fund dedicated to covering insurance policies. If a natural disaster strikes and leaves multiple insurers bankrupt, the guaranty fund may run out. In this instance, you may not receive any payment.


The best way to prevent this scenario is by selecting a company that’s financially stable, regardless of whether or not they are an Admitted Carrier. Financially stable insurance companies have a very low risk of becoming insolvent, even after a major event like a natural disaster. They often have large reserves of capital, which substantially decreases the risk of their being overdrawn during a widespread tragedy.

Insurance Rating Organizations

The best way to determine the financial stability of an organization is to check its rating with an insurance rating organization. These organizations grade insurers on their ability to pay claims, or their creditworthiness. The grades given to insurers usually range from:

You should avoid any organization with a grade of “C” or lower. A.M. Best is the most well-known rater of insurance companies, but other reputable sources include Moody’s, Fitch, and Standard & Poor’s.

State Oversight of Admitted vs Non-Admitted Insurance Carriers

Admitted Insurance Carriers are required to work closely with their state government because the claims of Admitted Insurance Companies are supported by the state. This means that the state government is granted:

Though Non-Admitted Insurance Carriers aren’t as closely monitored by the government, they are still regulated by the state’s surplus line office. The surplus line office requires Non-Admitted Insurance Providers to:

Though Non-Admitted Carriers may sound illegitimate, they are regulated by the government. However, because the state is not financially liable for their failures, Non-Admitted Insurance Carriers have more freedom and flexibility in the types of plans they offer and the fees that they charge.

What are the costs of Admitted vs Non-Admitted Insurance Carriers?

The rates of Admitted Insurance Carriers are approved by the state. This means that their pricing model is less flexible than a Non-Admitted Insurance Carrier. You are unlikely to get a great deal but won’t experience price gouging either. Consider the security that an Admitted Carrier provides when comparing it to a Non-Admitted Carrier.

Non-Admitted Insurance Carriers aren’t beholden to the state and might be open to charging you lower rates. On the flip side, Non-Admitted Insurance Carriers are required to pay additional surplus line insurance fees and taxes on your policy. More flexibility in pricing means that costs from Non-Admitted Insurance Carriers tend to be more volatile. Your rates can change dramatically from year to year. Additionally, Non-Admitted Carriers often take on higher-risk coverage, and the premiums charged will likely be proportional to the risk.

Final Word

When it comes to making decisions about which insurance carrier or policy is right for your business, the most important factor to consider is whether the insurer is financially stable. Don’t consider price until you are sure that you are working with a reputable business. Consult an insurance rating organization like A.M. Best, and make sure that your carrier has a rating of B or higher. Though Non-Admitted Insurance Carriers might seem less legitimate at first glance, they fill an important need in the marketplace. If your business needs a policy that can’t be obtained through an Admitted Insurance Carrier, Non-Admitted Carriers with an “A” rating or better are generally a safe bet.

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