What must be disclosed if insurance is placed with a non-eligible unauthorized insurer?

When an insurance policy is placed with a non-eligible unauthorized insurer, it is crucial to disclose certain information to ensure transparency and compliance with regulations. Disclosing that coverage is placed with an unauthorized insurer is essential because it directly informs the policyholder that the insurer does not have the authorization from state regulators to operate within the state. This carries significant implications for the policyholder, as unauthorized insurers may not be subject to the same level of consumer protection laws that apply to authorized insurers.

Furthermore, stating that a substantial portion of the coverage is eligible through an authorized insurer adds another layer of important information. This reveals that there are options available to the insured that may offer better security and consumer protections than going with the unauthorized insurer. By Combining both disclosures—informing the insured about the unauthorized status of the insurer and the availability of authorized options—the insurer fulfills their obligation to provide the full context surrounding the placement of the policy.

Thus, both elements are crucial for the insured’s decision-making process and are required to be disclosed when policies are placed with unauthorized insurers.