Nonadmitted Insurance refers to insurance obtained from which type of insurer?

• A. Nonadmitted insurers
• B. Admitted insurers
• C. Reinsurers
• D. Foreign insurers

Answer: (A)

Nonadmitted insurance means coverage obtained from carriers that are not licensed or admitted to transact insurance in the state where the risk is located. This is the surplus lines market, used when the standard, admitted market can't provide coverage or terms for a particular risk. Because these insurers aren’t admitted, they operate under different regulatory requirements and the placement typically happens through a licensed surplus lines broker, with specific tax and filing rules.

Admitted insurers are the licensed, standard market carriers whose forms and rates are pre-approved by the state, making them the usual source of coverage. Reinsurers provide protection to other insurers, not directly to the policyholder, so they aren’t the source of front-line coverage for a consumer. Foreign insurers are simply insurers chartered in another state or country; they can be admitted or nonadmitted in this state, but nonadmitted refers specifically to those not licensed to do business in the state.