Understanding Admitted versus Non Admitted Insurance Companies

0:00 Ralph: My cousin, Jay from South Carolina reached out to the show with this question. Jay: I've been trying to understand the difference between admitted insurance companies and non admitted insurance companies in my area of South Carolina. We've been having many problems with insurance companies leaving the area because of the last six years, we've been having close calls. Our homeowner's insurance is going through the roof. Of course, the homes are worth more, and I can understand it's gonna be a little bit more. So my wife has me looking for cheaper insurance that we pay for the year, with also the coverage that we want. The company we have right now is Orion 180. I see a lot of good reviews. They are an admitted company in some states, but not in this area yet. So I'm trying to understand that if you have a them as a company, that is why you're paying cheaper insurance, because they're not following the state's guidelines yet.

0:46 So, is it more risky dealing with a non admitted company if something bad is gonna happen to your home? I think this might make a really good topic on your show, especially people live in a coastline areas. If you can give me your thoughts, I would appreciate it. Ralph: Have you ever wondered what the difference between an admitted and a non admitted insurance company is. What does it mean for you as a consumer? We'll stay tuned today because you're going to find out.

1:40 Thank you for joining us on this personal finance Friday. Today, we're diving into the world of insurance to understand the difference between admitted and non admitted insurance companies. I have to admit that I truly had no idea. What he was asking when he sent over the question. But with some research, I found some answers and I'm going to share those answers with you today. The truth is insurance can seem a really complicated, but understanding the key concepts can help you make wise choices when purchasing policies for your family or your business. Well it's an absolutely beautiful sunny morning here on the farm today. And my friends. It's truly a great day to be alive and share some time with you. If this program is a blessing to you, do me a favor and please share with others.

2:22 And before I get started, I want to remind you to subscribe to the show. You can join our email list. You can do that at askralphpodcast.com . So you don't miss tomorrow's show when we're going to discuss tips for accounting, for rental properties. So if you have a rental property or, you know, someone that has a rental property tomorrow's show will be one, they don't want to miss. So let's start today. As we always do with our relevant Bible verse. As it says in Proverbs chapter 27, verse 12, the prudent see danger and take refuge, But the simple, keep going and pay the penalty. Let's break this topic down together. First. Let's start by answering the question. What exactly is an admitted insurance company. And like I said, I really didn't know what this meant.

3:03 And when my cousin, Jay reached out to me and asked me about that, Admitted insurers are companies that are licensed. In the state where they're conducting business. What does that mean, Ralph? It means they submit financial filings. They're subject to regulations in that state and contribute to state guarantee funds. Which help pay claims if the company goes bankrupt. That's a pretty important thing. This provides an extra layer of consumer protection. Companies such as Allstate state farm and Geico. And these are just a few, these household names are examples of typically admitted carriers. On the other hand, not admitted or surplus line carriers are not licensed at the state level.

3:43 They are regulated more loosely at the federal level. These companies serve higher risk clients and may be turned down by standard insurers. The premiums may be higher and they don't pay into state guaranteed funds. So you might ask yourself, Ralph, why does this distinction matter? Here are some key implications as a consumer. If you're working with a non admitted insurer know that you have less recourse, if there are issues with claims or solvency, do your homework to ensure the company is financially stable before purchasing a policy. Admitted insurers are more tightly regulated and overseen by state departments of insurance. That's pretty important. This provides an extra layer of consumer protections.

4:25 Admitted, companies may have more flexibility with coverage options since they play by the state's rules. While non-admitted carriers only offer certain specialized policies. In the event, your insurance company goes bankrupt. Admitted insurers pay into state funds that may help pay claims during insolvency. No such safety net exists for surplus line carriers. or these not admitted carriers? You need to be careful when you obtain quotes, don't assume the cheapest premium is the best option. You've got to consider coverage. Company reputation and admission status as you choose. Doing a little bit of research on the front end can prevent major headaches later on. If you ever need to file a claim and truth is that's when you really run into problems with insurance.

5:09 So here are some action steps you can take to make wise choices on the program. I always try to bring you some action items. Ask your agent to specify which companies they are quoting are admitted versus not admitted. You might not have even thought about this beforehand. I honestly had never thought about this. So the next time I talked to my agent, this is a discussion we're going to have. If he's going to present me with several different quotes, I want to know which ones are admitted versus not admitted. And once you do that, you search the company's rating and financial strength On sites, like am best or standard and Poor's do some due diligence, do some research into the company. The next thing you want to do is check in your state's department of insurance to validate licensure and admission status. Now the truth is folks, how many people would take the time to do that?

5:52 But most people's homes are their biggest assets. So you want to make sure you've got insurance. That's going to cover you in the event of a casualty. Another thing you could do is read online reviews from current policy holders before purchasing. Now while admitted carriers provide an extra level of security. Non-admitted many companies can still potentially fill a niche. If you have higher risk. As with any major financial decision, do your due diligence. An ounce of prevention is truly worth a pound of cure. Now, before we wrap up over remind all of our listeners to visit our podcast page, you do that at askralphpodcast.com . There you can leave a review, share your thoughts, or even send us a message like my cousin Jay did with future questions that we can talk about on this show now, while you're there.

6:35 Make sure you join our email list to enter into our weekly $25 Amazon gift card drawing. You're also there, you can schedule a consultation with me to discuss your specific circumstances. Now listen, folks. I would really encourage you to share this episode. If you know, someone is navigating decisions about insurance and some of these hard hit areas where insurance has become extremely expensive, share this episode with them. So they understand the differences between these. Admitted and not admitted carriers. So as we wrap up, today's edition of Ask Ralph. Let's recap what we covered on the difference between admitted and not admitted insurance companies. We've learned a lot. admitted. Insurers are licensed at the state level, not admitted, operate at the federal level.

7:16 admitted company's pay into state guarantee funds, not admitted, do not. Admitted carriers have more oversight and regulation at the state level while not admitted fill a specialty niche, but consider financial and reviews closely. Check admission status when obtaining quotes to make wise choices. The goal today is that you feel empowered to make informed insurance decisions that protect your assets without overpaying. Like my cousin Jay said. The goal was to save some money, but you want to make wise decisions. So stay tuned for more practical tips on aligning your finances with your faith. And until next time. Stay financially savvy my friends. And may God bless you abundantly.