What type of insurer provides coverage that may not be admitted but operates in other states?

The correct answer is that a Nonadmitted Insurer provides coverage that may not be recognized as admitted in a particular state but operates in other states. Nonadmitted insurers are those that do not have a license to conduct business in a given state; however, they can provide insurance coverage under specific conditions.

In many jurisdictions, these insurers are referred to as surplus lines insurers, and they typically offer coverage for risks that admitted insurers may not cover, often filling gaps for unusual or high-risk situations. Because nonadmitted insurers are not subject to the same regulatory requirements as admitted insurers, they can offer more flexibility in terms of coverage options and pricing, allowing them to operate efficiently in multiple states.

This makes them an important aspect of the insurance market, especially for specialized or high-risk insurance needs. The definition helps clarify the role of nonadmitted insurers as they are integral to providing coverage for risks that might otherwise remain uninsured due to the limitations placed on admitted insurers.