Admitted Insurance Companies: Explained
Admitted insurance companies are those that file with the state they are doing business in which means they are subject to many laws to protect the people doing business with them. An example would be Progressive or Nationwide, a company that everyone knows and usually trusts.
Admitted companies comes with the protection that if they were to go out of business or become financially unstable the state would step in and uphold the insurance policy contract.
Non-Admitted Insurance Companies: Explained
A Non-Admitted company is one that is not required to follow all the rules and regulations of the state. Also non-admitted insurance companies do not file rates with the state and would not be backed by the state Guarantee Fund. But that does not make non-admitted companies bad.
Non-admitted insurance companies have greater flexibility since their rates and forms are not filed and approved by the state. The real measure of an insurance company is their financial rating. Most admitted insurance companies have a sub company or branch company that is Non-Admitted. For example, Scottsdale Insurance Company is a Non-Admitted carrier, but is a division of Nationwide.
Because the insurance marketplace for construction in the state of New York has become very complex.
In New York, the majority of contractor’s liability insurance policies are written with non-admitted insurance companies.
This is a direct result of the high number of construction related lawsuits driven by New York Labor Law. The insurance marketplace has seen a steady decline of companies writing general liability for contractors in the state and an increase in insurance premiums. These difficulties requiring experts who specialize in tough to place contractors liability to find the proper coverage necessary for New York contractors.
Bottom Line
Whether an insurance carrier is admitted or non-admitted should not be the most important factor when considering an insurance company. But it is one of many factors that should be considered.
Some admitted insurance carriers are better than some non-admitted insurance carrier but the same can also be said about some non-admitted insurance carriers.
For example, Illinois Union Insurance Company, probably not a company you have heard of, is non-admitted in the state of New York, but they are part of the Chubb group of companies which is probably one of the most well known insurance companies in the world. They are backed by $2 Billion+ in surplus funds giving them financial security that few admitted carrier can even come close too.
A far better gauge of a good insurance company is the companies Am Best Rating and how they were reviewed in the JD Power survey.
Far too often people consider the price of an insurance policy above all else.
That would be a huge mistake.
Three key considerations when choosing an insurance policy are:
1. Coverage terms – What is being provided
2. Quality of the insurance company – Is the company going to be around to actually pay claims?
3. Price – How much is this going to cost me?
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