There are several different classifications of insurance you should be aware of. The classification determines the type of regulation that governs it; knowing a policy’s classification will help you determine how much protection is available for your clients’ coverage, and where to turn to get help.
o Admitted insurance – coverage licensed by the state in which it is purchased; the issuing company can be either domestic or foreign.
o Alien insurance – coverage sold by an insurer domi- ciled outside of the United States.
o Domestic insurance – coverage sold within a state by an insurer licensed within that state.
o Foreign insurance – coverage sold within a state by an insurer licensed in another state.
o Nonadmitted insurance – coverage sold by an insur- er not licensed to do business within the state in which the policy is sold.
o Surplus-lines insurance – coverage via nonadmitted insurance that is sold by a surplus-lines broker.
Nonadmitted insurance cannot be sold if admitted insurance exists that can provide comparable coverage, and it can only be sold through a surplus-lines broker since in this case it is the broker who is regulated instead of the insurance company.