Nonadmitted

Nonadmitted insurance refers to coverage issued by an insurer that is not licensed in a given jurisdiction to operate as an admitted carrier. Nonadmitted carriers may transact business through surplus lines arrangements or other exemptions designed for risks that admitted insurers cannot or will not insure. This status is distinct from admitted insurance, where the insurer is licensed and subject to state rate, form, and solvency regulation.

Placement of nonadmitted coverage is typically handled by a surplus lines broker. The broker attempts to place the risk with admitted carriers first; if unavailable, the risk may be placed with a nonadmitted carrier under the jurisdiction’s surplus lines rules. This approach is common for hard-to-place, high-value, or specialized risks.

Regulation and protections differ from admitted insurance. Nonadmitted policies generally do not require prior state approval of policy forms or rates. Pricing and forms are governed by the carrier and its home-state regulator, though state laws impose disclosures and consumer protections. Premium taxes or surcharges on surplus lines are typically paid to the state of risk, and brokers earn commissions under the surplus lines framework. Guaranty funds and similar protections that cover admitted insurers may not extend to nonadmitted policies, making solvency considerations and the carrier’s financial strength especially important to consumers.

Use cases for nonadmitted coverage include professional liability, cyber, and certain construction or specialty lines where admitted markets are unavailable or impractical. The nonadmitted designation emphasizes the regulatory distinction from admitted insurers and the alternative pathways through which certain risks can be insured.