California Property & Casualty Broker-AgentGeneral InsuranceEasy
An insurance company based in New York is authorized to transact insurance business in California. In California, how would this insurer be classified?
- ANon-admitted insurer
- BAlien insurer
- CForeign insurer
- DDomestic insurer
Show answer & explanationAnswer & explanation
Correct answer: C. Foreign insurer
An insurer formed under the laws of another state (e.g., New York) but authorized to do business in California is considered a foreign insurer in California.
Why the other options are wrong
- A. A non-admitted insurer is not authorized to transact business in California.
- B. An alien insurer is formed under the laws of a country other than the United States.
- D. A domestic insurer is formed under the laws of California.
Foreign Insurer
An insurance company formed under the laws of another state within the United States, but operating in the state where it is currently being classified.
- Operates in a state different from its state of incorporation.
- Must be authorized (admitted) to transact business in the state.
- Distinguished from domestic (same state) and alien (another country) insurers.
Memory trick: DOLPHIN: Domestic is Own, Foreign is Other state, Alien is another Nation.