Don’t Worry, We Have A Carrier For You

Through catchy jingles and creative advertising, you likely know the names of many large insurance companies. However, with the current state of the insurance market in California, homeowners are now learning about new companies because they may be struggling to find coverage. Outlined below are the types of property insurance companies available to consumers in the state of California.

1. Admitted (Standard)

An admitted insurance company is heavily regulated by the California Department of Insurance (CDOI). Companies are currently required to file their rates for approval with the CDOI. These carriers are also required to participate in the California Insurance Guarantee Association (CIGA). In the event that the company declares bankruptcy or goes insolvent, then CIGA will step in to assist up to a maximum limit.

As a consumer, you are typically best off using an admitted carrier, if available. Another advantage of placing coverage with an admitted insurance company is that you have the ability to appeal a decision with the CDI if a claim was processed incorrectly.

Mercury, Safeco, and State Farm are examples of insurers that are admitted in the state of California.

2. Non-Admitted (Excess & Surplus)

Non-Admitted companies are not required to file their rates with the CDOI, but they are still required to submit documentation to the CDOI to demonstrate their financial stability. Many non-admitted insurance companies are admitted in other states or subsidiaries of admitted companies.

Depending on the type of business in operation, a non-admitted insurance company may be the only viable option for coverage. Since a non-admitted insurance company is not required to file its rates with the CDI, it allows for greater flexibility in terms of coverage and pricing. A common misconception about a non-admitted insurance company is that it’s riskier to do business with than an admitted insurance company; however, the bottom line is the financial strength of a company determines the risk.

*California FAIR Plan

Finally, the CA FAIR Plan Association is a unique company. Their policies are meant to provide a temporary safety net for customers who can’t find coverage in the admitted market. They are known as the insurer of last resort, and their policies provide very limited coverage. Their policies will cover the perils of fire, smoke, lighting, and explosions with some additional coverage options that can be added. Personal liability and theft are two examples of key coverages not included on Fair Plan policies – These coverages can be gained by purchasing a companion DIC (Difference in Conditions) policy. Both admitted and non-admitted carriers offer DIC policies.

The FAIR Plan is not a state agency and does not have any public funding. The CA FAIR Plan is actually an insurance pool made up of all the admitted insurers, and they are backed by these companies.