How does admitted insurance differ from non-admitted insurance?

Admitted insurance differs from non-admitted insurance primarily in its regulatory environment and the protections it affords consumers. Admitted insurance is provided by licensed insurers who are authorized to operate in a particular state. These companies are subject to strict regulations imposed by state insurance departments, which include requirements for financial solvency, market conduct, and consumer protections. This regulatory framework ensures that policyholders have recourse through state regulatory bodies in the event of disputes with the insurer or in instances of insolvency.

In contrast, non-admitted insurance is typically offered by insurers that are not licensed in the state but still provide coverage. Although these insurers may offer flexibility in terms of coverage options, they do not offer the same level of consumer protections that come with admitted insurance and policyholders have less recourse if issues arise. Understanding the key differences in regulation and consumer protection helps in evaluating the types of insurance products available based on the needs of the insured.