What is an unauthorized insurer?

An unauthorized insurer refers to a company that is not licensed to operate within a particular state but nonetheless provides insurance coverage under certain specific conditions. This is a crucial concept in surplus lines insurance, where coverage is often sought from insurers that do not hold a license in the state where the insured is located.

In many states, including Arizona, the law allows for the placement of insurance with unauthorized insurers when certain criteria are met, such as the necessity of the coverage not being available from licensed carriers in the state. This is particularly relevant for unique or high-risk policies that may not be offered by authorized insurers within the state. The conditions under which an unauthorized insurer can operate typically include, but are not limited to, compliance with filing requirements and obtaining approval for specific types of risks.

In contrast, other options describe scenarios that do not accurately capture the definition of an unauthorized insurer; for instance, being licensed in all states or solely covering minors does not relate to the concept of being unauthorized, as they focus on licensing status or demographic market focus rather than the lack of a license. Therefore, the identification of an unauthorized insurer as one not licensed but still providing coverage accurately reflects the nature of such entities within the insurance marketplace.