Admitted vs. Non-Admitted Insurance Policies

If you have been placed with a non-admitted policy, should you be concerned? A non-admitted policy is basically a policy type that has not been filed with the Department of Insurance (DOI) and thus may not be subject to certain regulations. Most policies are admitted, but some are not. Let’s take a closer look at the differences between an admitted and a non-admitted policy.

Admitted

Admitted policies have been filed for approval by the DOI. This means that the policy language, applications requirements and rates have been filed with the DOI. The DOI has the right to reject the filing if necessary and to work with the insurance company to ensure that their filing complies with the DOI regulations for a given policy type. The DOI also makes sure that the insurance company meets the state’s solvency requirements. Once filed, an insurance company can market and sell its policies based on what it has filed and agreed to with the DOI.  Insurance companies change their filing from time to time, which can mean changing the policy terms or rates; however, these must go through the approval process.

Non-Admitted

Non-admitted policies go through minimal regulations and may not be subject to the state’s requirements and regulations.  Unlike admitted policies, non-admitted policies are underwritten on a case-by-case basis, and the terms for similar policies may differ. In non-admitted policies, language may be added or removed as the underwriter sees fit for a given risk. They may also offer certain coverage that may not be available from the admitted markets. In short, insurance companies have a lot more flexibility when underwriting these policies because they are not subject to any filing terms, as non-admitted policies are not filed with the DOI. These policies are often written on higher insurance risks that are not available through admitted markets; however, this is not always the case.

The Differences

When applying for insurance, admitted policies have a set of requirements that either are or are not met. With non-admitted policies, there is more flexibility in getting a policy approved, because an underwriter is not subject to what is filed with the DOI.  Admitted policies typically have more generous language, but this is not always the case. For example, certain coverages that are not available through an admitted policy may be available through a non-admitted policy. For this reason, it is sometimes preferable to place a policy on admitted paper but to then secure addition coverages that are not available through that admitted paper with an additional non-admitted policy. Lastly, if you have a claim, an admitted policy is regulated by the DOI and a complaint may be submitted if you have a dispute. Should there be a claims dispute with a non-admitted policy, on the other hand, the DOI may not intervene.

As previously mentioned, most policies are admitted policies simply because this is the best option for an agent to place you with in the majority of cases. Price is not a good reason to go with a non-admitted policy. The two main reasons to select a non-admitted policy are as follows.

  1. An applicant does not meet the underwriting requirements for an admitted policy.
  2. The coverage sought is not available on admitted paper.

While admitted policies are always preferable over non-admitted policies, the non-admitted markets exist because not everything meets the admitted requirements and because the admitted markets also do not always meet the needs of the policyholder. It is always best to discuss these issues with your agent to see what options are available in order to make sure you are securing the best option for your risk.  If you have questions, call ACBI at 203-259-7580 or visit our website.

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