West Virginia Property and Casualty Licensing Practice Exam

An insurance company not admitted in West Virginia must write coverage through which type of broker?

1. Direct broker

2. Excess lines broker

3. Standard broker

4. Internet broker

The correct answer is: Excess lines broker

An insurance company that is not admitted in West Virginia is required to utilize an excess lines broker to write coverage. An excess lines broker specializes in placing insurance with non-admitted insurers, which are companies that are not licensed to operate in the state but are still allowed to provide coverage under certain conditions. The excess lines broker essentially facilitates the transaction between the insured party and the non-admitted insurer, ensuring that all necessary legal and regulatory requirements are met while providing access to a wider range of insurance products that might not otherwise be available through admitted insurers. This setup is important for insureds who may be seeking specialized coverage that admitted insurers are unable to provide. Admitted insurers are those that are licensed and regulated by the state, which means they must comply with specific statutes, including minimum capital requirements and rate approvals. Thus, when coverage is sought from a non-admitted insurer, it is imperative to engage an excess lines broker who is authorized to place such risks. The other types of brokers mentioned do not have the regulatory authority or specialization required to handle coverage from non-admitted insurers. A direct broker typically deals with licensed companies, a standard broker operates primarily within the admitted market, and an internet broker may not have the necessary expertise or permissions to handle complex insurance placements