When choosing an insurance company, one key factor to consider is whether the carrier is admitted or non-admitted. Understanding the differences between these types of carriers can help you decide what’s best for your business.
At-a-glance comparison
| Feature | Admitted Carriers | Non-Admitted (Surplus Lines) |
| Regulation | Strict oversight by CA Dept. of Insurance | Regulated by State Surplus Lines Office |
| Rates/Forms | Must be filed and state-approved | Flexible; can be tailored to the risk |
| Insolvency | Backed by State Guaranty Fund | No state backing (claim may go unpaid) |
| Fees & Taxes | Exempt from certain surplus fees | Subject to surplus lines taxes & fees |
| Best For | Standard risks (General Liability, etc.) | High-risk or niche/specialized needs |
Admitted Insurance carriers
Being an “admitted” insurance carrier means that the insurance carrier is filing their rates and requirements based on the California Department of Insurance regulations. Being admitted is to ensure that the carrier can provide fair pricing to all consumers, as well as being able to pay out claims.
Benefits:
- If the admitted insurance carrier fails, the state will help cover your payments.
- Exempt from certain fees or taxes on your policy.
- Being able to appeal a decision with the California Department of Insurance if you believe a claim was handled incorrectly.
- Policies and rates are consistently regulated by the California Department of Insurance
Things to look out for:
- Policies and rates are consistently regulated by the California Department of Insurance 🙂
- Rates are required to be structured, filed, and approved by the California Department of Insurance. Carriers do not have the flexibility of changing rates whenever they want to
Non-Admitted Insurance Carriers
Non-admitted (excess & surplus lines) insurance carriers do not file their rates with the California Department of Insurance and are not subject to the same regulations as admitted carriers. However, these carriers are still regulated by the state surplus lines office, and still have requirements that they need to maintain. Nearly all surplus lines carriers in California are still rated at A.M. Best Financial Rating of A- or higher, with many at A+ or above. Most, if not all, non-admitted carriers are subsidiary companies of common admitted carriers that you have heard of, such as Travelers, Nationwide, Liberty Mutual, Chubb, etc. They are just a different department within the larger brand name that you have heard of, but with different underwriting restrictions and rates.
Benefits:
- More flexibility in terms of coverage and pricing.
- Offer you coverage on risks that are not typically covered by other insurance companies.
- Higher wildfire risk tolerance
Tip: Work with a trusted local agent to see if you can get the same coverage at a lower rate.
Things to look out for
- Financial insolvency is not covered by the state, meaning that if the insurance company fails, your claim could fail to be paid.
- Will have to pay for the additional fees and taxes.
- Rates can change at renewal, either higher or lower, depending on the market conditions. The rates will follow market conditions.
A.M. Best Ratings
No matter which type of insurance carrier you pick, purchasing from a reputable company is just as important. Through the A.M. Best company, they provide a letter grade from A++ to F, to represent a company’s financial strength. A higher rating generally indicates a more reputable and financially stable carrier, regardless of being an admitted or non-admitted carrier.
Which Type of Carrier Should I Pick?
Deciding between the two types of carriers should come down to which one fits your business needs the best. Having an admitted carrier can be a great option for those who fit within their regulations. However, admitted carriers do come with stricter rules, and may not cover every business type.
If you require more specialized coverage or greater flexibility, a non-admitted carrier might be more suitable. Just because a “non-admitted” carrier does not need to follow the same “admitted carrier” state insurance regulations, does not make them any less qualified than an admitted carrier.
