When shopping for insurance, you may come across terms like surplus lines insurance, non-admitted insurance company, e&s insurance, etc. So, what do these all mean? While the names can sound concerning at first, surplus lines insurers play an important and increasingly necessary role in today’s insurance market.

How Surplus Lines Insurance Is Regulated

Non-admitted insurance companies are regulated at the state level through state surplus lines offices, rather than through the same approval process used for admitted carriers. In addition, surplus lines brokers — the licensed professionals who place coverage with non-admitted carriers — are also regulated by the state. Here at Unity One Insurance, we are a broker for admitted insurance companies, non-admitted insurance companies, and also a direct agent with others!

Although non-admitted insurers are not required to file their rates and policy forms for pre-approval, they are still subject to oversight, including periodic market conduct examinations to ensure compliance and fair practices.

Why Surplus Lines Insurance Companies Exist

One of the biggest advantages of non-admitted companies is flexibility. These insurers can design specialized insurance products that admitted carriers often cannot offer. This makes them especially valuable for:

• Hard-to-place or higher-risk properties
• Unique or non-standard exposures
• Situations where admitted carriers have pulled back or declined coverage

In short, non-admitted insurers help fill gaps when traditional insurance options aren’t available.

Non-Admitted Insurance Companies and Guaranty Funds

State insurance commissioners establish guaranty funds to help protect policyholders if an admitted insurer becomes insolvent. Non-admitted carriers are not covered by these state guaranty funds, which is an important distinction to understand.

That’s why working with financially strong non-admitted carriers is critical. We choose to work only with companies that carry a financial stability rating of “Excellent” (A- or better).

Why Non-Admitted Insurance Matters in Today’s Market

In today’s hard insurance market, many admitted carriers have reduced their capacity or exited certain markets altogether. As a result, non-admitted insurance options have become essential for securing reliable coverage — especially in states like California and other high-risk areas.

The Bottom Line

Non-admitted insurance carriers provide vital solutions when standard insurance options fall short. While they operate differently than admitted insurers, they are still regulated, carefully monitored, and — when chosen wisely — financially strong.

If you have questions about non-admitted insurance or whether it’s the right fit for your situation, our agents are always happy to help explain your options and guide you through the process.

Key Characteristics

• Non-Admitted: They aren’t licensed by the state’s Department of Insurance in the traditional way, meaning they aren’t bound by the same rate and form regulations as standard carriers.
• Surplus / Excess Lines: They handle risks that admitted insurers deem too unusual or high-risk (e.g., homes in high-risk areas, large commercial properties, special events).
• Flexibility: Their lack of strict regulation allows them to create unique policies and rates for specialized needs.
• Regulation: While not directly state-regulated like admitted carriers, they are overseen by state Surplus Lines Offices and must meet certain financial standards.
• Placement: Policies must be placed by a licensed surplus lines broker, and often only after admitted carriers have rejected the risk. 

Pros for Policyholders

• Access to coverage for hard-to-insure risks.
• Potentially better-tailored policies. 

Cons for Policyholders

• No State Guaranty Fund: If the insurer becomes insolvent, the state doesn’t guarantee claims payments.
• Taxes & Fees: Policyholders often pay additional surplus line taxes and stamping fees.
• Fewer Protections: Less recourse for claim disputes compared to admitted carriers. 

A good example of a good non-admitted insurance conglomerate would be Lloyds of London, they are one of the largest insurers and writer of insurance policies in the world.  Although not licensed in California, they are a premier insurance company dating back to 1688.