California Property & Casualty Broker-AgentGeneral InsuranceMedium
Which of the following describes an admitted insurer in California?
- AAn insurer that is formed under the laws of a country other than the United States.
- BAn insurer that is authorized by the California Department of Insurance to transact insurance business in the state.
- CAn insurer that is headquartered in California but conducts business in other states.
- DAn insurer that is not authorized to transact business in California but may do so under special circumstances.
Show answer & explanationAnswer & explanation
Correct answer: B. An insurer that is authorized by the California Department of Insurance to transact insurance business in the state.
An admitted insurer, also known as an authorized insurer, is one that has received a Certificate of Authority from the California Department of Insurance (CDI) and is legally allowed to sell insurance policies in the state.
Why the other options are wrong
- A. This describes an alien insurer; it may or may not be admitted in California.
- C. This describes a domestic insurer, but not necessarily its admission status in CA.
- D. This describes a non-admitted or surplus lines insurer, which operates under different rules.
Admitted Insurer (CA)
An insurer that has been granted a Certificate of Authority by the California Department of Insurance, allowing it to legally conduct insurance business in the state.
- Also known as 'authorized' insurer.
- Subject to state regulations and solvency oversight.
- Policies are backed by the California Guarantee Association.
Memory trick: In California, insurers are sorted by where they're chartered and where they're permitted.