Non-Admitted Carrier (Surplus Lines)

A non-admitted carrier — operating in what is called the excess and surplus lines (E&S) market — steps in when standard admitted carriers decline a risk. Non-admitted carriers have more flexibility in pricing and policy terms because they are not required to file rates or use state-approved forms. This flexibility allows them to insure high-hazard operations like tree service companies that admitted carriers consider too risky.

Many tree service companies end up with non-admitted carriers, especially during their first few years in business or after a stretch of claims activity. The E&S market is not inherently bad — some of the largest and most financially stable insurers in the world operate as non-admitted carriers (Lloyd's of London syndicates, for example). The key is to verify the carrier's financial strength through A.M. Best ratings. An "A" rated non-admitted carrier is far more reliable than a poorly rated admitted one.

The primary downside of non-admitted carriers is the absence of state guaranty fund protection. If your non-admitted carrier becomes insolvent, there is no safety net to pay your outstanding claims. This is why your agent should only place coverage with financially strong E&S carriers. Additionally, non-admitted policies often carry surplus lines taxes and fees that admitted policies do not, which can add 3-5% to your total cost.

Another practical difference: non-admitted carriers can change rates, terms, and conditions at renewal without state approval. This means your premium can increase significantly from one year to the next, and coverage terms can be modified with less notice than admitted carriers are required to provide. Review your renewal terms carefully and ask your agent to re-market your account periodically to check whether you have become eligible for admitted market placement.