Basically, an admitted insurance company has been approved by a state’s insurance department, whereas, a non-admitted carrier is not backed by the State of Texas. The following is from Insureon.com:
An admitted insurance company is backed by the State, which means:
- The insurance company must comply with the regulations set by the state’s department of insurance.
- If the insurance company fails financially, the state will step in to make payments on claims if necessary.
A non-admitted insurance company is not approved by the state, which means:
- The insurance company does not necessarily comply with state insurance regulations.
- If the insurance company becomes insolvent, there is no guarantee that claims will be paid, even if the case if active at the time of the bankruptcy or financial failure.
- If policyholders think their case was handled improperly, they cannot appeal to the state insurance department.
Essentially, an admitted carrier protects you financially, and also gives you more rights in the event that something went wrong. Unfortunately, you do not have those luxuries with a non-admitted carrier. Be careful, because it may be cheaper to get a non-admitted carrier, but it may also leave you with no coverage and no recourse. Or, even worse, when you need them the most, at the time of a claim.
Remember what our parents always told us growing up as kids. YOU GET WHAT YOU PAY FOR!!!!! IF you have the choice, spend the money to get an admitted carrier! I assure you, it can provide a lot of relief for you, and your pocketbook!