How do admitted and non-admitted insurance carriers differ?


Insurance companies are classified as either “admitted” or “non-admitted.” 

Admitted insurance companies are regulated by the state’s Department of Insurance, and therefore are required to follow state regulations. Admitted companies’ rates, practices, advertisements and cash reserves are all regulated by the state. 

Non-admitted companies are not required to follow state regulations; however, they must prove to be financially stable. Rates are not regulated by the state, which allows these companies to take on higher risk applicants, with a potential for greater loss. One of the more commonly known non-admitted insurance companies is Lloyd’s of London.

Whether an insurance company is regulated by the state or not impacts the type of risk the company can cover. Although companies that are admitted are backed by the state, the amount policy owners receive for a claim could be less, because each state has a maximum amount that can be paid out if an insurance company fails.

When choosing between an admitted and non-admitted company, the most critical factor to consider is their financial strength, which can often be determined by the company’s A.M. Best rating. A.M. Best ratings are assigned based upon the “creditworthiness” of the company, as well as the operating performance, business profile, etc. When determining whether to use an admitted or non-admitted company, it is advised that you contact your insurance agency for guidance.