What Does Self-Procured Insurance Mean?
Self-procured, or independently procured, insurance refers to any policy that is bought from an insurance company not licensed in the state where the insured resides. This practice is legal but discouraged because the state cannot provide protection if the insurance provider becomes bankrupt.
Insuranceopedia Explains Self-Procured Insurance
Admitted insurers are the only ones who are licensed to sell insurance within a particular state. Those who buy insurance from a non-admitted insurer are getting self-procured insurance.
This happens, for instance, when the insured cannot buy the insurance they want because the product isn’t offered by any of the admitted insurers.
There are risks involved with self-procured insurance that arise from the fact that non-admitted insurers are not regulated by the state. As such, it doesn’t belong to the guaranty fund that protects the policyholder when the insurer becomes bankrupt.