Non-Admitted Insurance
Understanding Non-Admitted Insurance Policies in Massachusetts
Surplus lines insurance provides a valuable solution for unique or hard-to-place risks. While these policies are issued by insurers not licensed in Massachusetts, they are backed by reputable, well-established companies and can offer excellent coverage options tailored to your specific needs.
FAQs
Non-Admitted Insurance and the BR-7 Affidavit
When purchasing surplus lines insurance in Massachusetts, you may be asked to sign the BR-7 Affidavit. This document acknowledges that the insurer is not licensed in the state and is not regulated under Massachusetts insurance laws. It also explains that in the rare event of the insurer’s insolvency, the Guaranty Fund Management Services (GFMS), sometimes known as the Massachusetts Insurers Insolvency Fund, will not cover claims.
However, it’s important to note that the potential risk to policyholders is minimal. For the GFMS to apply, a licensed insurer must go insolvent and exhaust all its financial resources without paying claims. While surplus lines insurers are not covered by the GFMS, they are often large, reputable companies with strong financial backing. Companies like Lloyd’s of London and Hiscox are renowned for their stability and ability to handle claims efficiently.
Guaranty Fund Management Services
The GFMS, often known as “Massachusetts Insurers Insolvency Fund“ is designed to protect policyholders of licensed insurers in Massachusetts, covering claims up to $300,000 if an insurer becomes insolvent and cannot fulfill its obligations. While surplus lines insurers are not eligible for GFMS protection, this should not be a cause for concern for most policyholders. For this to impact you, the surplus lines insurer would need to go insolvent, run out of resources, and you would need to have an active, unpaid claim at that time. This combination of events is exceptionally rare, particularly when working with financially sound and established surplus lines insurers.
Why Choose Surplus Lines Insurance?
Reputable Carriers
Surplus lines insurers like Lloyd’s and Hiscox are industry leaders with strong reputations for stability and claim management. Their extensive resources and global expertise ensure dependable coverage.
Customized Solutions
Surplus lines insurance is tailored for risks that standard insurers may not cover, offering flexibility and innovation for unique needs.
Financial Confidence
While surplus lines insurers are not regulated by Massachusetts, they are carefully vetted and meet strict financial solvency requirements in their jurisdictions.