What is the status of insurance sold through a non-admitted insurer?

Insurance sold through a non-admitted insurer is considered unregulated by the state in which it is sold. Non-admitted insurers are those that are not licensed by the state’s insurance department, which means they do not have to comply with the same regulatory requirements as admitted insurers. Because these insurers are not under the state's jurisdiction, they can provide coverage for risks that might not be available through licensed providers, including unique or high-risk situations.

Policyholders are typically informed of the unregulated status of these policies, which may lead to elevated risks since the state will not provide consumer protections such as guarantee funds in case of an insurer’s insolvency. This distinction allows non-admitted insurers to operate with more flexibility in terms of pricing and coverage options, but it also means that consumers should perform thorough due diligence before entering into any agreements with such insurers.

In contrast, policies sold by admitted insurers are strictly regulated by state laws to ensure financial stability and consumer protection, explaining why this choice does not align with the characteristics of non-admitted insurance.