Admitted vs. Non-Admitted Insurance Carriers: Pros & Cons

When it comes to insurance carriers, there are two main types to consider: admitted insurance carriers and non-admitted insurance carriers. Obtaining coverage with a non-admitted insurance carrier in Florida has unique benefits and disadvantages. 

In this article, our insurance lawyers will discuss the pros and cons of admitted vs. non-admitted insurance carriers, so that you can make an informed decision about your own coverage.

If you’re confused about your insurance options or need help with a claim, contact Tighe P.A. and our experienced insurance lawyers in Florida will help you choose the right course of action for your needs.

What is an Admitted Insurance Carrier?

In Florida, an admitted insurance carrier is a company overseen by the Florida Office of Insurance Regulation. Specifically, admitted insurance companies must have their rates, policies, and applications reviewed and approved. 

Additionally, admitted insurance carriers are financially guaranteed by the State of Florida in the event that they become insolvent. This means that you’re protected if anything goes awry with your carrier. 

What is a Non-Admitted Insurance Carrier?

Non-admitted insurance carriers are generally used to insure high-risk or hard-to-place risks, which admitted carriers cannot cover. For example, it may be difficult to get admitted insurance carriers to cover your business if it’s located in a place where property damage is common. 

A non-admitted insurance carrier is essentially unregulated, which means they have more flexibility when it comes to writing risks. The State of Florida has minimal oversight over the rates and policies that a non-admitted insurance carrier charges and issues.

Benefits of Admitted Insurance Carriers

As the State of Florida oversees admitted insurance carriers, policyholders have more legal protections. Admitted carriers must meet state financial and solvency standards and submit their policy forms for approval. 

FIGA (Florida Insurance Guaranty Association) protects admitted insurance carriers by covering insurer insolvency and claim payments. Additionally, admitted insurance companies are prohibited from increasing their rates without obtaining authorization from the State of Florida and must also have their forms approved to protect policyholders from hidden or unfair terms. 

Disadvantages of Admitted Insurance Carriers

Admitted carriers often have higher premiums. This is due to regulatory requirements and the cost of obtaining approval for their policy forms and rate increases. In some cases, admitted insurance carriers may not offer coverage for businesses or people who face unique or high-risk situations.

Benefits of Non-Admitted Insurance Carriers

Non-admitted carriers can provide coverage for high-risk or unique situations in a relatively short period of time as their policies are not subject to review. 

Non-admitted insurance carriers may have more flexibility than admitted carriers in setting premiums, which can result in lower payments for some policyholders.

Disadvantages of Non-Admitted Insurance Carriers

Non-admitted carriers are not subject to state regulation and may not be as financially stable as admitted carriers. Under Florida law (626.916(1)(e)), a person who purchases a policy from a non-admitted insurance company must acknowledge their understanding that the insurance carrier is not financially guaranteed by the State. 

The policies issued by non-admitted insurance companies may not be consumer-friendly and may contain harsh or unfair terms.

How Do I Choose Between Admitted vs. Non-Admitted Carriers?

There are many factors to consider when deciding between an admitted insurance carrier and a non-admitted carrier. Specifically, you should evaluate the factors and risks that are driving your decision to purchase insurance. 

A.M. Best Ratings

A.M. Best is an independent rating agency that evaluates the financial strength of insurance companies. A.M. Best ratings can help you determine whether an insurance company is financially stable and can pay claims.

Surplus Lines Disclosure Form

Florida law requires a person to sign a surplus line disclosure form when purchasing insurance from a non-admitted carrier. The form requires policyholders to acknowledge that they may be able to obtain coverage from an admitted insurance company. 

Stated simply, this form is intended to force policyholders to confront the risks associated with purchasing insurance from a non-admitted carrier.

If you’re stuck with choosing a carrier, you can consult our insurance lawyers at Tighe P.A. so that you make the right decision based on the factors above.

Contact Tighe P.A. Today To Learn Which Insurance Carrier Is Right For You

The decision to purchase insurance from an admitted insurance carrier vs. a non-admitted carrier depends on the risks you face. The experienced insurance lawyers at Tighe P.A. can help you understand the differences between admitted and non-admitted carriers and choose the right insurance carrier for you. 

Contact our law firm today to schedule a free consultation.

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