When it's time to renew your LPL insurance, you need to ask - "Are you insured with an admitted carrier?" Not all carriers are "admitted" and the differences may shock you.

Admitted Insurance Carriers

An admitted insurance company is one that is approved, regulated and licensed by the state’s Department of Insurance. This means that…

• All forms and coverages issued by the company have been reviewed and approved by the state.
• The insurance company must comply with all state insurance regulations and participate in the state’s insurance guaranty program.
• In the event that an admitted carrier were to fail financially, the state insurance fund would cover claims the carrier can no longer pay.

Then there is the question of price. Because their rates must also be approved by the state insurance department, an admitted company’s rates are usually more reasonable. In addition, admitted carriers do not have to pay Surplus Lines Tax that non-admitted carriers pay, which vary by state but usually add 3-6% to your premium.

Buying from an admitted carrier gives you peace of mind in two ways:

• You can be confident the state will cover your claims if the company fails for any reason (mismanagement, natural disaster, etc)
• If you disagree with the way your claim was handled, you can appeal the company’s decision to the state department of insurance.

Non-Admitted Insurance Carriers

A non-admitted insurance company is not regulated by the state’s Department of Insurance. This means that…

• The insurance company does not necessarily comply with state insurance regulations.
• The insurance company is not protected under the state’s guaranty funds, so if the company fails, you have no guarantee your claim will be paid. And historically, non-admitted carriers have a significantly higher likelihood of insolvency than admitted carriers.
• You are not able to appeal to the state department of insurance if you think your claim was handled improperly.

Because these carriers are under no regulation or review process in setting rates and premiums, non-admitted carriers can charge any price they want. When you combine this with the Surplus Lines Tax, this has historically meant high volatility in premiums and higher prices.

Have questions about Admitted vs Non-Admitted policies, contact Rich Balasa at 610-537-1444.