What is the definition of "non-admitted" or "unauthorized" in insurance?

The term "non-admitted" or "unauthorized" in the insurance industry refers specifically to an insurance company that is not required to obtain a certificate of authority from the state in which it operates. These companies have not received approval from state regulators and, as a result, are not allowed to offer insurance policies in that state unless they fall under certain regulations, such as surplus lines insurance.

Non-admitted insurers can still provide coverage, but they are generally subject to different regulatory requirements, which can include higher rates or coverage designed for risks that admitted insurers may not cover. This distinction is important because it highlights the regulatory framework that governs which insurance companies can operate in a particular state and under what conditions. These companies often serve niche markets or specific types of risks that might not be accommodated by admitted insurers.

The other options relate to aspects of insurance regulation but do not accurately capture the nature of non-admitted insurers. For instance, requiring a certificate of authority suggests a level of regulatory compliance that non-admitted companies do not have, while selling at higher rates or being authorized to sell surplus lines introduces other concepts that do not define the term "non-admitted."