What is 'Admitted Insurance'

Admitted insurance is insurance purchased from an insurance company that has been formally admitted or licensed to operate by the state insurance agency where the company operates. Admitted insurance companies are subject to various state laws that govern organization, capitalization, policy forms, rate approvals and claims handling, whereas non-admitted insurance companies are not subject to these regulations.

BREAKING DOWN 'Admitted Insurance'

Status as an admitted insurance company mandates compliance with all state insurance regulations, which are established and maintained by the National Association of Insurance Commissioners (NAIC). 

What Admitted Insurance Means

An insurance company that is “admitted” means it has been approved by a state’s insurance department and that...

  • The company must comply with all state insurance regulations.
  • In the event the insurance company fails, the state will step in as necessary to make claim payments. With a non-admitted insurance carrier, there is no such protection.

In addition, buying from an admitted carrier means that customers don't have to pay certain fees and taxes as part of the policy; admitted status makes those expenses unnecessary. Buying insurance from an admitted carrier also guarantees customers have a path for recourse if they believe a claim has been handled improperly; they can appeal to the state insurance department.

What Non-Admitted Insurance Means

“Non-admitted” status means an insurance carrier has not been approved by the state’s insurance department and that…

  • The insurance company doesn't necessarily follow state insurance regulations.
  • In case of insolvency, no guarantee exists that claims will be paid, even if a case is active at the time of business failure.
  • If a policyholder thinks his or her case was handled improperly, there is no recourse available to the state insurance department.

Many states allow non-admitted carriers to transact business in their state if 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 state regulated and do not contribute to the state guaranty fund, which protects policyholders from the bankruptcy of its insurance carrier.

A non-admitted insurance carrier is required to 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.

Purchasing insurance from a non-admitted carrier may seem riskier. However, non-admitted status is only one way to gauge the financial reliability of an insurance carrier. Insurance companies also get letter grades from A++ to F. These grades work similarly to classroom grades and are calculated by credit rating firm A.M. Best, which has been rating insurance companies since 1906. A non-admitted insurance company with a high rating is most likely a safe bet for buying insurance, while an admitted carrier with a C rating or below could be riskier.


  1. Insurance Industry ETF

    An insurance industry ETF invests primarily in insurance companies ...
  2. Admitted Assets

    Admitted assets are assets of an insurance company that are permitted ...
  3. Cooperation Clause

    An insurance contract clause that requires the policyholder to ...
  4. Insurance Defense

    Insurance defense refers to attorneys who focus on representing ...
  5. Classified Insurance

    Classified Insurance is coverage provided to a policyholder that ...
  6. Finite Risk Insurance

    Finite risk insurance is where the insured pays a premium that ...
Related Articles
  1. Insurance

    Bundle Your Insurance for Big Savings

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

    How To Easily Understand Your Insurance Contract

    Understanding your insurance contracts can go a long way in making sure that your advisor's recommendations are on track. Learn how to read yours today.
  3. Insurance

    The History of Insurance in America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  4. 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.
  5. 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 ...
  6. Insurance

    How Much Life Insurance Should You Carry?

    Before purchasing life insurance it is important to decide if you really need it, what type of policy is best, and how much coverage you should get.
  7. Insurance

    Homeowner's Insurance Guide: A Beginner's Overview

    Everything new homeowners need to know about homeowner's insurance to protect their residence.
  8. Insurance

    12 Car Insurance Cost-Cutters

    Car insurance rates are on the rise. If car insurance costs are dragging you down, use these tips to free yourself from some of the extra weight.
  9. Financial Advisor

    Mutual vs. Stock Insurance Companies

    Learn about the differences between stock and mutual insurance companies and which is best for you as a policyholder.
  1. What is the main business model for insurance companies?

    Read about the most important components of an insurance company business model, such as risk pricing, investing and claims ... Read Answer >>
  2. Can an Insurance Company Deny Coverage?

    Insurance isn't always as straightforward as other products, and insurers can deny coverage in many different instances. ... Read Answer >>
Trading Center