DEFINITION of 'Admitted Insurance'

Insurance purchased from a company that is admitted (or licensed) in the state in which the policy was sold. Admitted insurance must also be sold by an agent who is licensed in that state.

BREAKING DOWN 'Admitted Insurance'

By contrast, many states will allow non-admitted carriers to transact business in their state where there is a special need that cannot or will not be met by admitted carriers. Non-admitted carriers are usually referred to as "surplus" or "excess lines insurers". Non-admitted carriers are not regulated in that state and do not contribute to the State Guaranty Fund, which protects policyholders from the bankruptcy of its insurance carrier.

Insurance purchased from these carriers is therefore riskier than doing business with admitted carriers and brokers must inform consumers if their insurance has been placed with a non-admitted insurer. Also, the purchaser and/or the insurance broker must provide a statement that it made a good faith effort to obtain the insurance from admitted carriers before seeking out a non-admitted carrier.

RELATED TERMS
  1. Surplus Lines Insurance

    A policy that protects against a financial risk that is too high ...
  2. Admitted Company

    An insurance company that is domiciled in one state but is admitted ...
  3. Excess of Line Reinsurance

    Excess of line reinsurance is a type of reinsurance policy offered ...
  4. Nonadmitted Balance

    An item on an insurer’s balance sheet that represents reinsured ...
  5. Bureau Rate

    A standard price per unit of insurance set by a state's insurance ...
  6. Common Carrier

    A commercial entity that gets paid to transport goods or people. ...
Related Articles
  1. Insurance

    Bundle Your Insurance For Big Savings

    Bundling your insurance can save you money and time. Read on to see how get the most out of multiline insurance discounts.
  2. Insurance

    12 Insurance Questions for High Net Worth Families

    High net worth families should ask themselves these 12 questions regarding comprehensive insurance.
  3. Insurance

    For Life Insurers, Making Money Is A Numbers Game

    Life insurance is a data-driven industry that relies on complex financial models to predict future expenses and income from premiums and investments.
  4. Insurance

    Explaining Insurance

    Insurance is a form of contract between an individual and an insurance company that spreads risk in exchange for premium payments.
  5. Insurance

    How Living Abroad Can Increase Your Insurance Premiums

    When you live outside the U.S for an extended period of time, your auto insurance resets. We look at how you can work around this.
  6. Insurance

    How To Invest In Insurance Companies

    Knowing the special circumstances that insurance companies operate under helps in evaluating whether or not a listed insurance company is a good investment and whether the economic environment ...
  7. Financial Advisor

    Mutual Vs. Publically Traded Insurance Companies

    Should you buy your insurance policy from a mutual or publically traded insurance company?
  8. Insurance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
RELATED FAQS
  1. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  2. How do I choose which insurance company to use?

    Picking an insurance company to use is not an easy task, considering the financial crisis of 2008 and 2009. Several financial ... Read Answer >>
  3. What are examples of the largest companies in the insurance sector?

    Read about some of the largest and most influential companies in the insurance sector, a list that includes Berkshire Hathaway ... Read Answer >>
  4. What is the usual profit margin for a company in the insurance sector?

    Learn what the average profit margin is within the insurance industry, and what factors can affect the profitability of an ... Read Answer >>
  5. What are some examples of when insurance bundling is a bad idea?

    Learn about situations where insurance bundling may not be a favorable option. Bundling insurance is often a good idea, but ... Read Answer >>
  6. What demographic trends are creating potential profits for insurance companies?

    Discover the ways in which insurance companies can profit from demographic trends. Two major ones are aging populations and ... Read Answer >>
Hot Definitions
  1. Restricted Stock Unit

    Compensation offered by an employer to an employee in the form of company stock. The employee does not receive the stock ...
  2. Operating Ratio

    A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
  3. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  4. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  5. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center