Types of Insurance Companies

In the United States there are two main types of insurance companies – standard and excess line.

Standard Line Insurance Companies

These type of insurance companies are licensed by their state to provide insurance to residents of that state. These are the insurance companies you visit when you need auto, homeowners, life, or health insurance. In most cases, they are often called admitted insurers. The insurance company must provide its policy and rates to the insurance regulator of the state in order to receive approval.

Whether the approval is given or not depends on the type of insurance that will be provided. Standard companies in the majority of cases charge cheaper premiums than Excess Companies and are allowed to sell their insurance directly to individuals. Standard insurance is regulated by the state that gave them the license to provide insurance. These regulations include restrictions on forms, rates, and protect clients from unfair practices.

Excess Line Insurance Companies

These type of insurance companies also known as surplus are insurance companies that cover those that are high risk according to standard insurance policies. These can include someone that is a new entity or does not have enough history of loss to fit within the underwriting requirements found with standard insurance. These insurance companies are often known as unlicensed or non-admitted insurers that normally can write policies in any state but must have a licensed or be authorized where their main office is located. These insurance companies are much faster as they do not have to file any forms or file rates, but there are specific regulatory requirements that must be met.

In the majority of cases, most people will never need excess line insurance companies; however, these companies are great for large businesses or even those that own large acres of land they would like to protect with insurance.