Admitted vs. Non-Admitted

What’s the Difference and When Does It Matter?

If you’ve ever seen “This policy is written on a non-admitted (surplus lines) carrier,” it can sound intimidating. Here’s the simple version:

Admitted: Licensed by your state’s Department of Insurance (DOI).

Non-admitted (also called “surplus lines,” “E&S,” or “excess lines”): Not licensed in your state, but eligible to insure special or hard-to-place risks through a licensed surplus lines broker.

Why do both markets exist?

Admitted Carriers focus on common, well-understood risks using standardized rates and policy forms that the state regulates. If an admitted insurer fails, state guaranty funds may step in (up to state-set limits).

Surplus Lines Carriers take on unique, high-risk, or emerging exposures (think novel cyber threats, unusual property, distressed industries) that admitted markets won’t or can’t cover. They can customize coverage and pricing faster because their rates and forms aren’t pre-approved by the state, but there’s no guaranty fund protection.

In many cases, coverages start in surplus lines and later migrate to the admitted market once there’s enough loss data (for example, certain management liability products historically followed this path).

Primary Differences

Regulation

Admitted: Licensed and overseen by your state DOI; policy forms/rates are regulated.

Non-admitted: Regulated primarily in the insurer’s home (domiciliary) jurisdiction; eligible in your state via surplus lines rules. The broker must be surplus-lines-licensed and follow state compliance steps.

Guaranty Fund

Admitted: Yes, state guaranty fund may protect policyholders if the insurer becomes insolvent (limits vary by state).

Non-admitted: No guaranty fund protection.

Speed & Flexibility

Admitted: More standardized; changes take longer.

Non-admitted: Often faster to craft bespoke terms/limits for unusual risks.

Availability

Admitted: First stop for “normal” risks.

Non-admitted: Used only when admitted markets decline or don’t offer the needed terms/limits. States typically require a diligent search in the admitted market before surplus lines placement. (Exact rules vary by state.)

Taxes & Fees

Admitted: Premium tax paid by the insurer; fewer add-ons.

Non-admitted: Surplus lines premium taxes and stamping/filing fees usually apply; the home state (as defined by federal NRRA) governs tax allocation.

Pros and Cons

Admitted Market (licensed carriers)

Pros
Guaranty fund protection if the insurer becomes insolvent (state-specific limits).
State-regulated policy forms and rate oversight.
Typically simpler billing/fees.

Cons
Less flexibility for unusual risks or fast-changing threats (e.g., certain cyber coverages).
Capacity/terms may be tighter in stressed markets.

Non-Admitted / Surplus Lines

Pros
Access to coverage when admitted carriers won’t quote or can’t offer needed terms/limits.
Flexibility to tailor endorsements, sublimits, retentions for unique exposures.

Cons
No state guaranty fund—you are relying on the carrier’s financial strength and oversight in its domicile.
Surplus lines taxes/fees and state compliance steps.

Quick Decision Guide

Can Admitted Carriers cover you?
Yes -> use admitted unless there’s a compelling coverage or limit advantage elsewhere.
No or Declined or Terms Don’t Fit -> Surplus lines may be appropriate after a diligent search.

Is your exposure unusual, high-hazard, or emerging (e.g., niche cyber, new tech, distressed property)?
Yes -> Surplus lines can often tailor terms and limits quickly.

Comfort with state guaranty fund versus carrier financials?
If you value guarantee fund protection most -> Admitted.
If you need unique terms and limits and can accept no guaranty fund -> Surplus lines.

Frequently Asked Questions

Is the non-admitted market “unregulated”?
No. Surplus lines carriers are regulated in their home state, must be eligible in the state of placement, and the surplus lines broker is licensed/regulated by your state’s DOI.

Can the same insurer be admitted in one state and non-admitted in another?
Yes, admission is state-by-state. A carrier could be admitted in State A and write via surplus lines in State B.

How do I know if a surplus lines insurer is “eligible”?
States maintain eligibility lists or rely on surplus lines offices. (Example: Florida’s eligibility resources & search.) Your broker is responsible for compliance.

Who sets the rules for surplus lines taxes/compliance?
The federal NRRA (Nonadmitted and Reinsurance Reform Act) sets “home state” tax allocation and key definitions; states implement their own procedures (stamping, filings, etc.).

If there’s no guaranty fund, how do I gauge safety?
Work with a broker like Aragon Way that prioritizes financially strong carriers (e.g., A.M. Best ratings), ensures eligibility, and documents diligent search in the admitted market.

References

NAIC Model Law: Non-admitted Insurance Model Act (MO-870-1) (surplus lines insurer, licensee, placement).

Florida OIR / FSLSO: Eligibility & Definitions (eligibility resources; NRRA definitions and “home state”).

The Hartford: General overview of Admitted vs Non-Admitted