How is travel insurance regulated? This is quite a complex, but interesting, question. In the United States, over the years, the regulation of all insurance sold has passed back and forth between the states and the federal government. The quandary has always been, since most insurance companies sell insurance in many states, their activities amount to interstate commerce. One side of the debate sees that they should fall under federal government regulations, while another sees each state overseeing the regulations.
Who Regulates Insurance – Federal Government or States?
Since the beginning of the 20th century the courts passed jurisdiction to the states, then to the federal government. Then in 1944, the United States Supreme Court decided that regulation of insurance was best handled by each state. As all decisions of the Supreme Court are final, the matter was settled.
All of this cogitation about who was in charge occurred before the information age, in which we currently live. The Internet had not even been envisioned at that time. As a result of the court decision, Congress passed a law, in 1945, defining some standards of terminology for regulation of all insurance sold in each state. Today, the terms of regulation are fairly standard, allowing citizens a chance to make product comparisons from one insurance company to another.
Common Terminology for All Types of Insurance
The law passed in 1945 includes terminology for the situation where any type of insurance is sold in one state, where the selling company is domiciled in another state. In that case that insurance is declared foreign insurance. In the case where the selling company is domiciled in a foreign country, the insurance sold is called alien insurance.
These terms have relevant application in our online culture today. You often cannot tell where a company offering you insurance is located. This is especially true when the trip insurance is offered at time of travel booking. For example, one of the major sellers of international travel insurance is located in Australia, but they more than likely have an underwriter presence in the jurisdictions in which they do business.
How to be Sure Your Travel Insurance is Valid
To be certain of the status of an insurance company in question, you can check them out on the National Association of Insurance Commissioners website. Another thing you can do is compare quotes online using our rate comparison engine to find a reputable company to buy trip insurance from (check out the A.M Best Ratings when doing comparisons to gauge financial stability). In this manner you can have confidence on the travel or trip insurance you purchase.