Peerless Insurance - Purchasing Insurance From Nonadmitted Carrier

Peerless Insurance

There is a reason why one of an insurance agent's most essential functions is to place coverages on behalf of their customers with insurers that are financially strong. This is because the amounts typically available in the event of insurer insolvency under the various states' insurance guaranty funds may be less than the loss exposures of many insureds.

State laws exist that require warnings to the insurance purchaser of the risks involved in purchasing insurance from a nonadmitted carrier. However, few, if any, brokers involved in the sale of such policies generally warn of or explain these risks and the trade-offs involved to their customers adequately. This is particularly true in the personal auto liability coverage context, where these abuses are most prominent.