Question

When can unauthorized (non-admitted) insurers offer insurance?

1) Only when authorized insurers are not available
2) Only when authorized insurers refuse to provide coverage
3) Only when authorized insurers are unable to provide coverage
4) Only when authorized insurers are too expensive

Answer 1

Unauthorized insurers can offer insurance when authorized insurers are unable to provide coverage.

Step-by-step explanation:

In the insurance industry, unauthorized (non-admitted) insurers can offer insurance only when authorized insurers are unable to provide coverage. This means that if an individual or business cannot find coverage from an authorized insurer, they may seek insurance from an unauthorized insurer as a last resort. "Unauthorized insurers" typically refer to insurance companies that are not licensed or authorized by the regulatory authorities in a particular jurisdiction to sell insurance policies. These insurers operate without the proper approvals and oversight from regulatory bodies. Engaging with unauthorized insurers can pose significant risks for consumers and businesses.