One of the most important distinctions to understand when purchasing professional liability insurance is admitted vs non-admitted insurance. This classification can affect everything from how your policy is regulated to how claims are handled during insolvency.
If you are unsure what these terms mean, or why they matter when choosing a policy, you are not alone. This guide breaks down the differences, advantages, and drawbacks of admitted and non-admitted carriers—so you can make an informed decision for your law firm.
What is an admitted insurance carrier?
An admitted insurance carrier is approved and licensed by a state’s Department of Insurance. These companies must comply with all state insurance regulations, including filing policy forms and rates for approval. In return, policyholders benefit from oversight and an added layer of financial protection.
One of the most significant benefits of admitted carriers is that their policyholders are covered by the state’s guaranty fund. If the insurer becomes insolvent, the state may pay out claims up to a specified limit. This provides some financial security, especially in unpredictable circumstances.
However, admitted status does not guarantee that a carrier is more stable or reliable. It simply means the insurer has met specific state regulatory requirements.
Also read: What the CTA Means for Law Firms in 2025 and Beyond
What is a non-admitted insurance carrier?
A non-admitted insurance company, also known as an excess and surplus (E&S) carrier, is not licensed by the individual state in which it operates. Instead, these companies work through a state’s surplus lines office and are often used when coverage is unavailable through admitted markets.
While non-admitted insurers do not participate in the state's guaranty fund, they offer more pricing and policy design flexibility. They can cover higher-risk or unique exposures that admitted insurers often avoid. For instance, a law firm seeking specialized coverage may find suitable options only through a non-admitted carrier.
To mitigate risk, non-admitted insurers must still provide financial disclosures and are typically subject to financial solvency monitoring. Brokers selling non-admitted policies must also hold special licenses.
Key differences: Admitted vs non-admitted insurance
The main difference between admitted vs non-admitted insurance lies in regulation and financial protection:
- Regulation: Admitted carriers follow strict state guidelines and are overseen directly by the state insurance department. Non-admitted carriers are regulated through surplus lines offices and operate outside of the state’s standard approval process.
- Guaranty fund protection: Admitted insurers offer access to state guaranty funds. Non-admitted carriers do not, which means claims might go unpaid if the insurer becomes insolvent.
- Policy flexibility: Non-admitted insurers have more freedom to tailor policy terms, making them ideal for high-risk or niche coverage needs.
- Speed and customization: Because they do not need to submit filings for every policy change, non-admitted carriers can often deliver faster service and custom-built coverage.
Also read: What is Step Rate? Understanding How Insurance Premiums Change Over Time
What are the risks of a non-admitted carrier?
The biggest concern with non-admitted insurance is the lack of guaranty fund protection. If the company fails, the policyholder must rely on the insurer’s assets and bankruptcy process for claim payments, which can result in long delays and partial settlements.
Additionally, states may require that non-admitted carriers only offer coverage when admitted carriers have declined the same risk. This means policyholders may have limited access to these options unless other carriers have passed on the risk.
Is one option better than the other?
Not necessarily. Some of the largest and most financially stable insurers in the U.S. are non-admitted. On the other hand, not every admitted carrier is financially secure simply because it is licensed by the state.
When comparing admitted vs non-admitted insurance, the best choice comes down to your law firm’s specific needs. If you require a standard professional liability policy and want the protection of a guaranty fund, an admitted carrier may be ideal. But if your practice faces unique risks or requires more flexible terms, a non-admitted insurer could be a better fit.
What happens during liquidation or insolvency?
If an admitted carrier becomes insolvent, the state’s guaranty fund takes over claim processing. However, payout caps exist, and policyholders may not receive full compensation. Processing times can also be delayed, especially during large-scale liquidations.
For non-admitted insurers, the process resembles a typical bankruptcy. Assets are liquidated, creditors are prioritized, and policyholders must often pursue legal action to recover losses. In many cases, final payouts fall well short of expectations.
How should lawyers evaluate their options?
When selecting a policy, focus on financial strength, service reputation, and policy terms—not just whether a carrier is admitted. Law firms should:
- Review carrier financial ratings from independent agencies such as AM Best
- Assess the scope of coverage, limits, and exclusions.
- Consider the responsiveness and claims-handling experience of the carrier.
- Evaluate whether the policy fits the specific risks of their legal practice.
Whether admitted or non-admitted, your insurer should provide clarity, reliability, and the ability to protect your firm when it matters most.
Protect your firm with tailored professional liability coverage
Choosing the right insurance is about more than understanding admitted vs non-admitted insurance. It is about securing the future of your law firm.
Protexure Lawyers offers Professional Liability Insurance designed specifically for solo attorneys and small law firms. Our policy helps protect against common legal risks, including failure to file, conflicts of interest, and errors in legal advice. With competitive rates and a dedicated service team, we make it easy to get coverage that fits your firm’s needs.
