What does "non-admitted insurance" refer to?

Non-admitted insurance refers to coverage provided by insurers that are not licensed in the state where the insurance policy is issued. This means that these insurers have not received official approval from the state's insurance regulatory authority to operate in that jurisdiction. Non-admitted insurers are often sought after when traditional insurance markets do not provide suitable coverage options, especially for unique or specialized risks that may not fit the standard underwriting criteria of licensed insurers. This type of insurance allows for greater flexibility in terms of policy terms and conditions, which can be critical for certain businesses or situations.

Understanding this definition is crucial because not all insurance options are created equal; many businesses and individuals rely on non-admitted insurance to meet their specific needs when conventional options are insufficient. The option mentioning insurers outside of Texas may seem relevant, but it is the licensure aspect that is key in identifying whether insurance is considered non-admitted.