TYPES OF INSURANCE COMPANIES
Shopping for insurance and weighing your options can lead to a lot of different insurance quotes from different types of insurance providers. The type of insurance company you are working with will help you figure out whether you are getting the best value for your money on your insurance plan.
STANDARD LINES
One of the things that makes a standard lines carrier is its name. It is an insurance company that is allowed to work and sell certain types of insurance in a certain state. “Admitted carriers,” on the other hand, is another word for standard lines carriers.
It is up to the state board of insurance in the state or states where the standard lines carrier does business to set the prices that it charges for insurance. These carriers are also subject to the laws and restrictions of the states where they are licensed to work.
A standard lines carrier must pay into a state fund that backs them up. This fund will pay claims if the insurance company goes bankrupt.
EXCESS LINES
Another name for a company that sells extra lines of insurance is a “surplus lines” company. These companies mostly insure things like high-risk auto insurance or high-risk people who wouldn’t be able to get insurance from a standard lines company because of its underwriting guidelines or restrictions.
This could be someone who has a lot of speeding tickets or other traffic violations, or a company that has just started and doesn’t have any other customers yet.
CAPTIVES
A captive insurance company is one that usually covers the risks of a single industry or group of people, or a single type of risk, like shipping (transit insurance) or fleet insurance.
Suppose a shipping business couldn’t find affordable insurance through the standard insurance market. It might then form its own company to provide insurance for itself. The company that makes the insurance is called a “captive” of the parent company.
DIRECT SELLERS
A company that sells directly is one that doesn’t use insurance agents and sells insurance directly to the customer, rather than through insurance agents. Many direct selling companies have field offices where people work for the company. Most of the business is done online or over the phone.
There are no agents in the area who work for direct sellers, so the person who owns a policy must deal with the company directly for quotes, purchasing a policy, and making any changes to the policy.
It all comes down to whether or not the insurance customer is comfortable dealing with the insurance company directly, or if he prefers the help of his local independent insurance agent. Geico is a well-known insurance company that only sells to direct writers.
DOMESTIC
A domestic insurance company is licensed and runs in the state where it is based. The company can be licensed to work in other states, but in those states, it is seen as a person who is transporting an alien.
ALIEN
Because it was formed in another country, the alien insurance company must follow the rules of that country. People in France would think that a U.S.-based insurance company would be an “alien carrier” if it was operating in France.
LLOYDS OF LONDON
Lloyds of London is a company that specializes in insuring unusual or high-risk things. They get permission from the English Parliament to do so. Because the risks are often unusual, like a celebrity body part or oil risks, “main street” risks are also covered.
