Over the last few weeks, we’ve have calls from policyholders whose once affordable homeowners and windstorm insurance premium has in some cases nearly tripled ($7,800 to $21,000), and to make matters worse, the new rate is for wind only. This can sometimes happen with non-admitted carriers, also called surplus lines companies.

When purchasing an insurance policy, your agent may present you with a Surplus Lines Disclosure Form.  Wording like this that references an unlicensed carrier means that the policy in question is offered by a non-admitted insurance company. A non-admitted insurance company is one that is not licensed in the state where the risk or insured is located, and does not file nor get approval of rates or forms in that state.

It’s important to remember that “not licensed” as an admitted carrier doesn’t mean unregulated; each insurer must meet certain criteria to be an eligible non-admitted market, including regulations for financial strength and solvency. It does mean that the carrier has the ability to set their own rates and terms for the classes of business they write for both new and renewal policies.

Most states have guarantee funds, paid into and supported by admitted carriers, that will offer claims recovery to policyholders affected by the insolvency of an admitted insurance company. Non admitted carriers are not covered by these funds. This means that the guaranty fund of the state in question (Florida) will not step in to compensate a qualified insured if the non-admitted carrier goes bankrupt and cannot pay claims.

You can visit the Florida Office of Insurance Regulation’s company search page to learn more about your carrier, and as always, rely on your insurance agent’s advice to help you make the best decision for your situation.

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