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Simple English definitions for legal terms
nonadmitted asset
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A quick definition of nonadmitted asset:
A nonadmitted asset is something that a company owns but cannot include in their financial evaluation by law. It's like having a toy that you can't play with because your parents said so. Other types of assets include things like money, equipment, and property that a company owns and can use to make more money. Some assets are easy to turn into cash, while others are harder to sell. There are also assets that don't physically exist, like ideas or patents.A more thorough explanation:
A nonadmitted asset is an item that is owned and has value but cannot be included in evaluating the financial condition of an insurance company by law. In contrast, an admitted asset is an asset that can be included in evaluating the financial condition of an insurance company.
Examples of nonadmitted assets include:
- Investments in certain types of securities that are not approved by state insurance regulators
- Assets that are not easily valued or are difficult to sell
- Assets that are not owned by the insurance company but are held in trust for the benefit of policyholders
These examples illustrate that nonadmitted assets are assets that are not considered reliable or liquid enough to be included in an insurance company's financial evaluation.