Which of the following best describes a nonadmitted insurer?

A nonadmitted insurer is best described as one that is not licensed to operate in a specific state, such as the Commonwealth of Pennsylvania. These insurers are not subject to the same regulations as admitted insurers, which are those that have obtained a license from state regulators and comply with local insurance laws. Nonadmitted insurers often provide coverage in niche or specialized areas where admitted insurers may not offer products due to high risk or unique market conditions.

The other options do not accurately describe nonadmitted insurers. An insurer limited to issuing auto insurance typically refers to an admitted insurer that specializes in that market segment. Full regulatory approval signifies that the insurer is admitted and complies with local insurance regulations, which is contrary to the definition of a nonadmitted insurer. An insurer only available for local businesses implies a geographical limitation that does not inherently relate to their admitted or nonadmitted status. Therefore, the definition ascribed to the correct choice encompasses the essential nature of a nonadmitted insurer accurately.