Which characteristic is true about non-admitted insurance companies?

Non-admitted insurance companies are those that are not licensed by a state's insurance department to operate within that state. This lack of licensing means they do not have the same protections and regulation that admitted insurers have. Specifically, non-admitted companies are not protected by the state's Guaranty Fund, which is designed to provide a safety net for policyholders in the event that an admitted insurer goes insolvent. The Guaranty Fund only covers claims from policies issued by companies that are licensed and thus part of the state's insurance regulatory framework.

Since non-admitted insurers are not subject to the same level of scrutiny and regulation, they are also able to operate with more flexibility in terms of the products they offer and how they can design their policies. However, this flexibility comes at the cost of the lack of consumer protection that licensed insurers provide. Therefore, saying that they are not protected by the Guaranty Fund accurately reflects their characteristics and the implications for policyholders.