General Insurance PrinciplesQuestion 137 of 158
Which statement BEST describes the difference between an admitted and a non-admitted insurer in California?
a.Admitted insurers hold a Certificate of Authority and contribute to CIGA; non-admitted insurers do not
b.Admitted insurers may only write commercial lines; non-admitted insurers write personal lines
c.Non-admitted insurers offer cheaper rates because they are regulated more strictly
d.Both must participate in CIGA, but only admitted insurers may sell auto policies
Explanation
Admitted (authorized) insurers hold a CDI Certificate of Authority, are rate-regulated, and contribute to the California Insurance Guarantee Association (CIGA), which pays covered claims up to limits if the insurer goes insolvent. Non-admitted (surplus lines) carriers can place coverage only for risks the admitted market won't write, and policyholders get NO CIGA protection.
Law Reference: Cal. Ins. Code §700; §1063Practice all 158 questions free — no signup required.
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