The Difference Between "Admitted" & "Non-Admitted Carriers"
An Admitted carrier is “backed” by the California Insurance Guarantee Association (CIGA) Fund. The Fund would cover the claim up to you policy limit or $500,000 in liability; whichever amount is lower, in the case that the carrier becomes insolvent.
A ‘Non-Admitted” carrier has been approved by the California Department of Insurance to operate on a “Non-Admitted” basis but is not “backed” by the CIGA Fund. Financial stability of the carrier becomes very important when they are transacting business on a “Non-Admitted” basis. This can be investigated by using companies such as A.M. Best who are in business for the sole purpose of researching insurance carriers and compiling statistical information
One point that should be mentioned is that financial strength is not always related to the carriers Admitted or Non-Admitted status. Furthermore, there are more regulatory restrictions placed on the Admitted carrier. Some of the largest insurance companies in the world choose to transact business in California, and in all states, on a Non-Admitted basis.
Hayes Insurance Agency 3550 San Pablo Dam Rd. Ste. C El Sobrante, CA 94803 Toll Free Ph: (800) 869.8643 Local Ph: (510) 222.8643 Fax: (510) 222.6162 License #0658980