Ed Mackoul, president of Mackoul & Associates, Inc. discusses the benefits of being with an admitted insurance company vs. a non-admitted company.
An admitted insurance company is one who is licensed in that state to do business and is regulated by that states insurance department. There are benefits to being with an admitted insurance company. Number one is the guarantee fund. Admitted companies contribute to a guarantee fund which will pay any claims in the event they go insolvent. Non-admitted companies, since they do not contribute, their policy holder will not be eligible to have their claims paid. Number 2, in the event you feel that your claim has been handled improperly, if you are with an admitted insurance company, you could file a complaint with the state insurance department. Likewise, with a non-admitted company, you cant file that complaint with your states insurance department. And lastly, since non-admitted companies are not regulated by the state insurance department, they do not have to abide by the same guidelines. For example, in NY if mold results from a covered cause of loss, such as a fire or burst pipe, admitted insurance company can not exclude coverage. Where as a non-admitted company typically can and usually will do so. Now there are times where you should be with a non-admitted company. There may be times when an admitted company will not provide a quote. Could be unfavorable loss history, could be a type of occupancy inside the building, so there are viable options. But most cases, if you can get a quote from an admitted company, you should do so.