What describes a non-admitted company in the context of insurance?

A non-admitted company refers to an insurance provider that has either not applied for or has been denied a Certificate of Authority to operate as a licensed insurer in a particular state. This means that the company is not officially recognized by the state’s insurance department to conduct business within its jurisdiction. As a result, it cannot offer standard insurance products directly to consumers through agents or brokers in that state.

The context in which non-admitted companies operate often involves specialty or surplus lines of insurance, where their coverage options may fill gaps left by admitted carriers. However, the defining characteristic of a non-admitted company is their lack of a Certificate of Authority, which is crucial for legal operation in that state. In summary, the correct answer accurately identifies the core aspect of a non-admitted company in relation to the regulatory framework of the insurance industry.