Alabama Insurance Adjuster Practice Exam

An insurer that adheres to the law of a state but is located outside of that state is called a?

1. Domestic Insurer

2. Foreign Insurer

3. Alien Insurer

4. Surplus Lines Insurer

The correct answer is: Foreign Insurer

The term for an insurer that is incorporated in one state but conducts business in another state is known as a foreign insurer. This reflects the insurer's operational status relative to state licensing laws; although it adheres to the laws of the state where it operates, its home base is outside that state. Domestic insurers, on the other hand, are those that are incorporated and operate within the same state. Alien insurers are those that are based in a different country altogether, while surplus lines insurers deal with insurance that is not available in the regular market, often catering to unique or high-risk clients. Thus, the distinction of a foreign insurer accurately captures the relationship between the insurer's location and its operational licenses in the context of state law.