What is the meaning of Foreign classification of insurers?

The term "Foreign classification of insurers" refers specifically to an insurance company that is incorporated in one state but conducts business in another state. For instance, if an insurance company is established in California and is seeking to operate in Florida, it would be classified as a foreign insurer in Florida. This classification is crucial for regulatory reasons, as it means the insurer complies with both the laws of its home state and the state in which it wishes to operate.

Understanding this concept is essential for public adjusters because it frames how different insurers are regulated based on their geographic operations. The state regulations require foreign insurers to obtain licenses to operate within their jurisdictions, ensuring that all insurers follow local laws, which protect consumers in each state.