An insurance company that is “admitted” has been approved by a state’s insurance department. The lingo you’ll most often hear in insurance contracts and informational materials is that an insurance company is “admitted by the state insurance department.”
For business owners, buying from an admitted carrier means three things:
An insurance company that is “non-admitted” has not been approved by the state’s insurance department. This means that…
While it may seem as if admitted carriers are the clear winner between these two types, the issue is not as straightforward as it might appear. In addition to admitted and non-admitted status, insurance companies are given letter grades from A++ to F, which work the same as classroom grades. (These grades are calculated by a credit rating firm called A.M. Best, which has been rating insurance companies since 1906.)
A non-admitted insurance company with a high rating is most likely a solid bet for insuring your company, while an admitted carrier with a C rating or below could be risky.