California Life and Health Insurance Practice Exam

What term describes an insurer that has met the qualifications necessary to do business in California?

1. Unadmitted

2. Admitted

3. Excluded

4. Authorized

The correct answer is: Admitted

An insurer that has met the qualifications necessary to do business in California is termed "Admitted." This designation indicates that the insurer has fulfilled all regulatory requirements established by the California Department of Insurance, which includes being licensed and approved to provide insurance coverage within the state. Admitted insurers are subject to state regulations, allowing them to offer policies that have certain consumer protections and can take part in the state's guaranty fund, which protects policyholders in the event of an insurer's insolvency. The other terms like "Unadmitted" refer to insurers that have not received authorization to operate in that state. Similarly, "Excluded" typically pertains to coverage limitations within a policy, while "Authorized" can be used interchangeably with "Admitted," but in the context of insurance regulation, "Admitted" is the formal term recognized for those meeting business qualifications. Thus, the term "Admitted" specifically denotes compliance with state regulatory standards, making it the correct choice.