White List States
Candlefocus EditorWhat are white list states? Well, in the United States, a white list state is a state that allows insurance companies to use non-admitted insurers to provide specialized liability or property coverage in a policy. This practice is referred to as "surplus line insurance." Surplus line insurers provide coverage for risks that the licensed insurers will not accept due to their own internal guidelines or because the risks are too unusual or large.
White list states provide a more flexible and customizable option for customers who require coverage that the admitted insurers won’t provide. This type of coverage is usually necessary when a policyholder has a unique or challenging risk that needs to be customized to their situation.
Surplus line insurers are regulated by each state’s Department of Insurance. A white list state’s Department of Insurance will license the surplus line insurer, conduct inspections, and closely monitor the insurer to ensure that they are following the guidelines set forth by the state. Unlike admitted insurers, the surplus line insurer does not guarantee their coverage and so there is an additional layer of risk that the policyholder must assume.
Surplus line insurance is often seen as a last resort for those seeking coverage for their needs. This is because the premiums charged for this coverage tend to be more expensive than that of admitted companies and the coverage offered may not be as comprehensive. Additionally, the surplus line insurer may not be as financially stable as the admitted insurers, putting the policyholder at an even greater risk should any claims arise.
Overall, white list states provide necessary coverage options for those with more specialized needs. However, it is important to carefully weigh the pros and cons of using a surplus line insurer before making the decision to purchase a policy. Research the company’s financial strength, understand the coverage that is included, and make sure that the policyholder is aware of all of the risks associated with the policy.