let’s talk : INSURANCE [ADMITTED vs NON-ADMITTED]

Good morning!

Keeping today short and sweet with an interesting insurance tidbit I learned this week! 

So as we do, let’s talk Real Estate, let’s talk the ADMITTED vs NON-ADMITTED INSURANCE COMPANIES…

QUICK BACKGROUND

I am currently shopping around for a vacancy policy for Project Philadelphia as we look to either sell or rent out the property! After a few back and forth conversations with my insurance agent, we landed on a discussion about admitted vs non-admitted insurance companies. So let’s talk about that.

ADMITTED INSURANCE COMPANIES

Overview
An admitted insurance company has been approved by the state’s insurance department and therefore is under more regulation and oversight. As an admitted insurance company, they must comply with all state regulations regarding insurance. The good news for the
[admitted] insured is that, if for some reason the admitted insurance company fails financially, the state will step in and make payments on claims if necessary. If an insurance agent is able to find you an admitted carrier, more often than not, their  agency will require you to use them.

Pros 

  • No added insurance taxes or fees. These are all state regulated and monitored by the National Association of Insurance Commissioners (NAIC).
  • Back-up coverage for your claims in the event the insurance company is no longer able to pay them out.
  • Can appeal to the State Insurance Department in the event you believe your claim was not handled appropriately.

Cons

  • Because admitted insurance companies are so regulated, they do not always cover every scenario or property. For example, I personally have been rejected by admitted insurance companies in the past because a property was 100+ years old, or because it was located in a specific zip code. 

NON – ADMITTED INSURANCE COMPANIES

Overview
A non-admitted insurance company, also known as a “surplus” or “excess line” carrier, is not legally regulated by the state.  The issue you may run into here is if the company hits financial troubles, your claims may never be paid out OR if you ever disagree with your insurance claim and think it was handled poorly, you are not able to appeal to the “higher power” aka the state insurance department. 

Pros 

  • Covers a wider variety of properties and scenarios when compared to most admitted insurance companies 

Cons

  • Sometimes viewed as “riskier” as they are not state regulated OR backed. In the event you have an open claim and the insurance company hits financial hardship, the state will not necessarily step in to handle your outstanding claim.
  • Occasional volatility in pricing. 

Pro Tip: The true judge of insurance company character is actually the rating and not necessarily whether or not they are admitted. Insurance companies are rated A++ to FF, with A++ being the “best”. So if you find a non-admitted insurance agency with a high rating they may be a safer bet than an admitted agency with a lower rating! 

All of this being said, please note that I am NOT an insurance professional. I am merely sharing my learnings from my agent, and through the use of sources cited at the bottom of this post. Please consult with an insurance professional for all of you insurance needs.

DO WE HAVE ANY INSURANCE AGENTS ON HERE?! WOULD LOVE TO HAVE YOUR EXPERT OPINION ON THE MATTER!!

Feel free to comment on the blog post HERE and let us know what YOU think!

Happy Wednesday!
Erin

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Data Sources for Today’s Content: 
Me – this is based on my own personal experience!

https://www.insureon.com/insurance-glossary/admitted-vs-non-admitted-insurance-carriers/

https://www.investopedia.com/terms/a/admitted-insurance.asp

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