What distinguishes an admitted insurance company from a non-admitted insurance company in California?

Admitted insurance companies are those that have received a certificate of authority from the California Department of Insurance, allowing them to operate legally within the state. This certification ensures that admitted companies meet specific regulatory standards and comply with state laws concerning financial stability, consumer protection, and claim handling.

With this authorization, admitted insurers are also able to participate in the state's guarantee associations, which provide a layer of protection for policyholders by covering claims in the event that the insurer becomes insolvent. This regulatory oversight is crucial as it helps to maintain the integrity of the insurance market and protect consumers.

In contrast, non-admitted insurance companies do not have this certification and operate without the same regulatory framework, which can pose risks for consumers, as they do not have the same financial guarantees or protections. While non-admitted companies may indeed offer certain types of insurance coverage or specialized risks that admitted companies do not, their lack of oversight means that purchasing insurance from them carries different implications for policyholders.