Admitted vs. non-admitted insurance companies
There are two types of insurance carriers: admitted and non-admitted. Each one serves different customer needs based on how they operate. Admitted carriers follow stricter regulations and are backed by the state. Non-admitted carriers have more flexibility to insure high-risk professions. Understanding how each works can help you determine which type fits your business.
If you're unsure whether your business requires non-admitted coverage, the experts at Progressive Commercial can help. Start a quote online or call our team for guidance.
What is an admitted insurer?
An admitted insurer, or admitted carrier, is a company licensed by the state and required to comply with state insurance regulations. The insurance department oversees their financial strength, reviews their rates and policies, and ensures they meet all guidelines.
Admitted insurers are backed by state guaranty funds. This means that if the insurer goes out of business, the guaranty fund will pay approved claims, so you have coverage even if your insurance provider can't pay.
What is a non-admitted insurer?
A non-admitted insurance company provides business insurance in higher-risk sectors, such as construction, transportation, and manufacturing. They have the freedom to customize policies for unique business risks because they operate in a specialized market known as excess and surplus lines (E&S).
States license E&S brokers to help businesses find insurance with non-admitted companies if they don't qualify for coverage through the admitted market. Due to the level of risk, surplus lines policies aren't guaranteed by the state.
Finding a reliable insurer
Small businesses need reliable insurance, especially those in the non-admitted market. The A.M. Best credit rating agency grades admitted and non-admitted carriers from F to A,++ so you can find a trustworthy provider for any business insurance.
Pros of admitted insurance
- State financial guaranty
- Regulatory oversight
- Standardized policies
VS.
Cons of admitted insurance
- Less pricing flexibility
- Fewer customization options
- Limited carrier choices
Pros of non-admitted insurance
- Flexibility
- Higher coverage limits
- Customized to unique risks
VS.
Cons of non-admitted insurance
- No state financial protection
- Fewer dispute resolution options
- Less standardized
Key differences between admitted and non-admitted insurers
Depending on your business's level of risk, you may be insured by either an admitted or non-admitted carrier. Each type of insurer operates under its own rules and offers different protections, which are outlined below:
- Licensing and regulation: Admitted carriers are licensed in the state where they operate and follow strict guidelines. Non-admitted carriers sell through insurance brokers in states where they aren't licensed.
- State backing: Admitted insurers are backed by the state, so you can make claims even if your insurer goes out of business. Non-admitted insurers can't provide this protection.
- Flexibility: Non-admitted carriers can insure businesses in riskier sectors, like construction, that admitted carriers might not cover.
- Claims and disputes: Policyholders with admitted insurance can file complaints regarding claims decisions through the state department of insurance. Non-admitted insurance typically doesn't offer this option, but you could participate in direct negotiation or mediation.
- Taxes and fees: Non-admitted insurers have to charge certain fees and taxes that non-admitted insurers do not.
Both kinds of insurance are valuable, offering important protections to the businesses that need them.
Excess and surplus insurance
The E&S market protects businesses that face too much risk for standard insurance, including general contractors, roofers, tree trimmers, and arborists. We partner with highly rated non-admitted carriers to help provide coverage for professions and industries with specialized needs.
Who needs an admitted carrier vs. a non-admitted carrier?
Generally, businesses don't decide whether to get admitted or non-admitted insurance. Instead, it depends on what insurance market you're in. Most small businesses qualify for admitted insurance. However, certain professions with higher risks will have to get coverage through a non-admitted carrier.
Other situations can also put you in the non-admitted market for coverage. For example, businesses in coastal areas prone to hurricanes may have to get property insurance from the non-admitted market.
Getting admitted and non-admitted insurance from Progressive Commercial
Progressive Commercial has insured small businesses for over 50 years. Our experience, combined with trustworthy partners in the non-admitted market, makes it easy to get the coverage you need to operate even a high-risk business with confidence.
Give us a call or start a quote online to learn how we can help you.
