Carrier Insurance: What's Underlying Coverage?

Underlying insurance is the coverage in place on the same risk that will respond to loss before an excess policy is called on to pay any portion of the claim. An insurance carrier is the company that provides your insurance coverage. It is also the financial resource behind the policy. The insurance carrier underwrites the policy and issues payments for claims. In some cases, a carrier may not be financially responsible but instead serves as an administrator of insurance policies.

Underlying insurance

Umbrella insurance provides additional liability protection on top of the primary insurance coverage. It can cover losses that exceed the limits of the primary insurance, liabilities that are not covered by the primary insurance, and losses that occur when the primary insurer is insolvent.

Umbrella policies usually require the maintenance of the underlying coverage, and the umbrella insurer's involvement in a loss is determined as if the underlying contract is still in force, even if it is not. The only exception is when the underlying policy has been exhausted by payment of the loss, in which case the umbrella policy "drops down" to replace the underlying protection.

Any additional insured under the underlying insurance is automatically covered by the umbrella policy, but the coverage is not broader than that provided by the underlying insurance.

Underlying carriers and their functions

An underlying carrier is a third-party vendor or carrier that provides telecommunications services to a reseller, who then provisions these services to its customers. In other words, they are the providers of the facilities or infrastructure used by resellers to deliver their services. Underlying carriers rarely interface directly with the end customer, as this is the role of the service provider.

The term "underlying carrier" is commonly used in the context of outbound calling or termination. For example, in the case of outbound calling, an underlying carrier may be involved in removing Post Dialing Delay (PDD).

Underlying carriers are responsible for performing switching, routing, and call completion functions. They are also required to contribute to universal service support mechanisms based on their revenues.

In the telecommunications context, an underlying carrier is essential to connect phone calls. They carry the phone number, making it live and active so that it works. This is different from a service provider, who sells the service to clients and offers various features and packages.

In some cases, the service provider and the underlying carrier can be the same entity, as is the case with large companies like AT&T and Comcast, which own their carrier networks. However, in most cases, they are separate entities working together to provide phone services to customers.

Understanding the distinction between an underlying carrier and a service provider is important, especially when corresponding with your phone service provider or when attempting to resolve difficult issues by contacting the underlying carrier directly.

Admitted vs non-admitted insurance carriers

Underlying coverage refers to the insurance coverage in place on the same risk that will respond to a loss before an excess policy is called on to pay any portion of the claim. An insurance carrier is the company that provides your insurance coverage.

Admitted insurance refers to coverage offered by insurance providers who are licensed to operate by the state insurance departments where they are based. These agencies govern nearly all aspects of an admitted insurance company's operations, including capitalization requirements, policy forms, rate approvals, and claims handling. Admitted insurance companies must adhere to regulations regarding policy forms, rate approvals, and claims handling. If an admitted insurance company fails and is unable to pay claims, the state insurance fund will step in to pay the claims.

Non-admitted insurance refers to an insurer that is not licensed with the state to provide a type or amount of coverage. Non-admitted carriers are often referred to as "excess and surplus line carriers". They are regulated by the state surplus lines office and are not subject to the same rules in underwriting. They also do not have to set the same rates as admitted carriers. Non-admitted insurance covers risks that admitted insurers won't cover.

While admitted insurance may appear more legitimate, the designation is an administrative one and has no real bearing on the overall quality of the product or the stability of the carrier offering it. Non-admitted insurers are not necessarily unstable, but you should always research an insurer before buying a policy.

How to choose an insurance carrier

An insurance carrier is the company that provides your insurance coverage. They are responsible for underwriting insurance plans and issuing payments for claims. When choosing an insurance carrier, there are several factors to consider to ensure you get the best coverage for your needs. Here are some guidelines on how to choose an insurance carrier:

• Research the carrier's reputation and financial health: Look into the company's history, customer reviews, and financial backing. Check annual reports and ratings from independent agencies to assess their financial stability. A strong financial rating indicates a lower risk of your claim being rejected due to financial instability.
• Compare quotes and coverage: Obtain quotes from multiple carriers offering similar coverage to find the most competitive rate. Ensure you understand the details of the coverage, including any exclusions or limitations, to make an informed decision.
• Consider your specific needs: Evaluate your unique circumstances and identify the type of coverage that best suits your needs. For example, if you have a home, consider factors like location, square footage, construction materials, and safety features when choosing a carrier.
• Assess customer service and accessibility: Opt for a carrier that offers excellent customer service and multiple channels of communication. Consider the availability of 24/7 support, local agents, and digital management options through mobile apps or online portals.
• Evaluate third-party ratings: Refer to ratings from organisations like J.D. Power for overall customer satisfaction, and AM Best and Standard & Poor's (S&P) for financial strength. These ratings provide valuable insights into the carrier's performance and ability to fulfil their financial obligations.
• Explore available discounts: Different carriers offer various discounts that can help reduce your premium. Compare the discounts offered by different carriers and determine which ones you may qualify for to maximise your savings.

By following these steps and conducting thorough research, you can make an informed decision when choosing an insurance carrier that best aligns with your coverage needs, financial stability, and customer service expectations.

Insurance carrier vs. insurance provider

An insurance carrier is the company that provides your insurance coverage. It employs your insurance agent, who handles your claims and may help set up your premium payments. You can file an insurance claim with your agent or directly with your carrier. The carrier will then coordinate any follow-up that you need to make with claims adjusters, who work for the carrier. When you receive a payout for your loss, it will come from your insurance carrier.

Insurance carriers are also called insurance companies or insurers. They underwrite your policy and issue payments for your claims. Carriers can be classified as mutual companies (wholly owned by their policyholders) or proprietary companies (owned by shareholders). Some familiar examples include Progressive, The Hartford, and Travelers.

An insurance agency, on the other hand, is an individual or company authorized by a carrier to sell the insurer's products in exchange for compensation. Agents are regulated by the laws of the state in which they work. Independent agents typically offer products from a variety of carriers, while captive or exclusive agents only sell the products of one insurer.

While the terms "insurance carrier" and "insurance provider" are often used interchangeably, the term "provider" is more often used to describe the hospitals and doctors who provide health care services. Therefore, if you’re going to use the term "provider" to mean "insurer", you should clarify by saying "insurance provider".

Frequently asked questions