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High Risk Insurance Definitions

Admitted Carrier: "Admitted" means the insurer is licensed in the state and subject to regulation there. Typically the insurer agrees to submit to inspections by that state, maintain an office there and participate in insolvency pools. Non-admitted insurers do not submit to these requirements. Admitted Carriers are bound by solvency laws, meaning they are supported financially in case of a bankruptcy, by the state. If an admitted carrier becomes insolvent, the clients claim would still be paid.

Non-Admitted Carrier: Not licensed to transact business in the state in which it operates. They are not bound by solvency laws, and in the case of a bankruptcy, the client’s claim would not be paid. However, non-admitted does not mean unregulated. While an admitted carrier is subject to the regulatory authority of any state where it is admitted, a non-admitted carrier’s jurisdiction is subject to the regulatory authority of another jurisdiction. Further, many states review non-admitted insurers vital statistics and place them on an approved list if they meet certain financial and other requirements. The insurance brokers who use non-admitted insurers are regulated through special licensing procedures.

Solvent: Financial stability of a company; able to fulfill its monetary obligations.

Insolvent: The inability of a company to cover its financial obligations. When a carrier becomes insolvent, it can no longer pay claims.

 

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