Today’s edition of Insurance Straight Talk is about the two markets within the Connecticut Insurance world and how they might affect you or your business. We’ll start with the standard market. That is what you’re all most familiar with.
The companies that fall under the standard market are your Travelers, Hartfords, GEICOs, Hanovers, Progressives, etc. These companies are known as admitted insurers and they are covered by the state’s Guaranty Fund.
In other words, if any of these companies were to become insolvent, and unable to pay claims made against their policies, the Guaranty Fund protects Connecticut Insurance consumers up to X amount per policy. These are the companies that handle the majority of risks, personal and commercial alike.
There’s a second market, however. It’s called the Excess and Surplus Market, or the E&S Market. When the standard market doesn’t have an appetite for a particular risk, and an agent gets three declinations from standard market companies (i.e., when three standard companies have declined to write a risk), the E&S Market becomes a viable option.
It’s never the first option because these companies are often non-admitted carriers, which are not covered by the state’s Guaranty Fund, and they don’t need to play by the same rules as the admitted carriers. Further, brokers and producers can, in accordance with state law, charge additional Fees. However, if you’re a high-risk individual or business (e.g., a roofer, you live near the coast, you’re a new business, you’ve have had multiple claims or let your coverage lapse), you might find the only place that you can obtain coverage is in the E&S market.
While it’s not exactly ideal to have a policy in the E&S Market, it might be your only option. The bottom line is if you find yourself looking at policies in this market, you’ll want to do your homework. Because they’re not covered by the state’s Guaranty Fund, it’s best to make sure that the insurer you’re considering is A rated and therefore financially sound. It would also make sense to have your agent shop multiple brokers because coverages, endorsements, exclusions, and premiums can vary by a great deal from one company to another.
Keep in mind, if you have an option to take a standard market policy, even if the premium is higher, you’re likely better off doing so. Again, E&S policies are not protected by the state guaranty fund and often these polices exclude coverages that standard market policies typically include. So read your policies carefully and ask your agent if you have any questions.
If you have any questions about your personal and/or commercial insurance programs or just want the best coverage at the most competitive rate available, gives us a call at 860-529-1737 or email us at email@example.com.