Insurance companies operate in two general modes: Admitted and non-admitted. Admitted companies must file their rates, rules, and forms with each state insurance commissioner and either receive express or implied approval. Many states are very particular in the approval process, to make sure you receive adequate protection and are not subject to excessive or unfairly discriminatory rules. With Admitted insurance, you are also protected from insolvency by a guarantee fund.
Non-admitted companies do not file their rates, rules and forms with each state. Beware of non-admitted companies trying to sell E&O in your state — you are at the mercy of the insurance company and their broker. They can change rates or coverage whenever they want. Even though most states (including California) have laws that establish a preference for Admitted insurance, some unscrupulous insurance brokers will ignore these laws.
if you have to pay a “State Tax” or “Stamp Fee”, the company is probably non-Admitted.
This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.
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