In basic terms, there are two types of Insurance companies: “admitted” insurance companies and “excess/surplus” insurance companies.Admitted insurance companies have to file their rates with the state in which they operate and that state has to approve those rates. They cannot arbitrarily decide to increase your rates without filing with the State Board of Insurance for a change.In addition, if an admitted insurance company becomes insolvent, meaning belly-up or bankrupt, the state’s Guarantee Fund refunds any premiums due policy holders. It also pays any claims for policy holders that occur during the period of time from the insolvency to the individual’s purchase of new insurance, up to the limit of $300,000.Excess/Surplus insurance companies (also called non-admitted companies) DO NOT have to file their rates with the state and they do not have to go by filed rates. They can do whatever they want with their rates, when they want, in any state they choose because they are not governed by the same guidelines as admitted companies to conduct business. Some really dubious companies will even raise your rate in the middle of your policy period if they so choose.Moreover, if an excess/surplus company unravels to the point of insolvency, there is no Guarantee Fund. There is neither a safety net for any of the premiums that might be due and more importantly, any claims made against your company during or after the insolvency would not be covered.So, why would any one ever use an excess/surplus company? Well, you may not have a choice. You might have to go to a non-admitted company as a last resort because admitted insurance companies have determined that your business is too high-risk. Another reason that would send you the way a of non-admitted company is having the unfortunate experience of trusting an insurance agent who has not presented your account accurately to the underwriters or insurance companies.Insurance companies have an established criteria for judging the financial risk of a prospective insured. If a company’s risk goes beyond the risk that admitted insurance companies can assume, a non-admitted insurance company would step in and offer coverage, but at a premium that will almost always considerably exceed the approved rates of the State Board of Insurance. Along with higher premiums, rates, finance charges, policy fees and taxes; it is important to note that excess/surplus companies also typically exclude coverage’s your company may need to protect its interests.There is virtually nothing high-risk about swimming pool construction if the wording in the builders’ subcontractor agreements and insurance policies of the sub-contractors they use are consistent.The laws vary from state to state regarding proper sub-contractor agreements and their wording. In order to make sure your agreements and coverage’s are the same and follow the standards of your state, you should be able to contact your insurance agent and have the agent write proper admitted insurance company policies to protect your company.For pool builders, there can be sizeable advantages to having an insurance agent experienced in such an unique industry. Seasoned agents can help you attain the best possible rates by preventing any miscommunication between you and the insurance underwriters that might cause your rates to increase or might exclude vital coverage’s.
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