What is meant by the term 'nonadmitted insurer'?

The term 'nonadmitted insurer' refers to an insurer that is not licensed to operate within a specific state. In California and many other states, insurers must obtain a license from the state’s insurance department to offer insurance products. If an insurer does not have this license, it is considered nonadmitted.

Nonadmitted insurers often play a vital role in the market by providing coverage for risks that admitted insurers may not be willing or able to underwrite. This can include unique or high-risk situations. It's important to note that while nonadmitted insurers are not regulated in the same way as admitted insurers, they can still offer valid insurance coverage.

The other definitions do not accurately describe nonadmitted insurers. For example, insurers that provide medical insurance only do not inherently fall into the nonadmitted category; they could be licensed. Similarly, limited coverage options do not define a nonadmitted status—coverage can vary widely among both admitted and nonadmitted insurers. Lastly, the concept of being licensed for specific types of business pertains more to the types of policies insurers can issue rather than their admitted or nonadmitted status.