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Pest Control Insurance: Save on Fees, Taxes & Never Look Back

Admitted Insurance Coverage

An ‘admitted’ pest control business insurance coverage simply means an insurance program achieves minimum standards set by the Department of Insurance. They are voluntarily registering with the state and agreeing to be regulated by them. Being admitted ensures regular review of carriers exterminator business coverage details (forms) and pest control insurance rates (premium) to ensure the best protection for small business and consumers. Ongoing review of the insurers financial standing helps ensure they’re able to meet their obligations and pay your pest control applicator claims. If an admitted wildlife removal insurance carrier becomes insolvent, your claims up to $300,000 and unearned premium up to $10,000 may be covered by each State’s Insurance Guarantee Association.

Unadmitted Insurance Coverage

‘Unadmitted’ pest control coverage, also referred to as unauthorized, surplus lines, or excess lines market, is not regulated by the State, AND NOT COVERED BY A STATE’S INSURANCE GUARANTEE ASSOCIATION.  Wood destroying insect and other specialty business insurance carriers are usually not accepted by the state because they don’t meet the minimum standards to protect businesses and consumers. Failing to meet the standards could mean unfair coverage forms or rates, or poor financial standing. Further, to offset governmental costs for providing consumer affairs on behalf of unregulated insurers, states charge an additional tax on every unadmitted policy.

Required Explicit Notification: Unauthorized Insurance Coverage

Before an agent or broker is allowed to offer (or renew) unauthorized pest control or other insurance coverage, Law requires they attempt to obtain coverage from an admitted insurance carrier first.  Law also requires each unadmitted pest control policy contain a form which swears under oath 1) agent attempted to obtain coverage from admitted carriers; and 2) insured acknowledges hazards of surplus lines carriers.  Some states require notarization. Must be risky if the state requires special disclosure form!

How can I tell if I have an authorized policy?

How can you tell if it’s an unauthorized carrier? If you pay any type of sales tax on your pest control insurance, then you have an unauthorized insurer! It’s that simple.  There are also usually additional administrative and broker fees, service charges, or other extra costs involved with surplus lines exterminator insurance coverage.

In summary, about standard lines vs surplus lines insurance

If your carrier is surplus lines, did your agent explain about the State Insurance Guarantee Association, and how they won’t cover any losses in case of insolvency? Did they have you sign a special form as required by Law? Which state admitted carriers did your agent attempt to obtain coverage from? Did they try again on renewal, as required?

In some circumstances, admitted carriers might cost more money. But remember, you get what you pay for. With huge insurance companies such as A.I.G. requiring tens of billions in our bailout money, don’t you want another layer of protection? Be smart: if it’s available, choose an admitted carrier whenever possible.

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