South Dakota Crop Insurance Practice Exam

What type of insurer is formed or incorporated within a specific state?

1. Foreign insurer

2. Independent agent

3. Domestic insurer

4. Alien insurer

The correct answer is: Domestic insurer

A domestic insurer refers to an insurance company that is formed or incorporated within the specific state in which it operates. This means that its legal headquarters and regulatory compliance are situated in that state, and it follows the local laws and regulations pertaining to insurance practices. By being recognized as a domestic insurer, the company is subject to the supervision and regulations of the state's insurance department, which typically includes licensing, financial solvency, and consumer protection standards. In contrast, a foreign insurer is one that operates in a state but was incorporated in another state. An alien insurer, on the other hand, is incorporated outside of the United States altogether, contrasting with domestic insurers that are established within the U.S. An independent agent typically refers to a sales representative who can sell insurance products from multiple companies, but does not have a direct correlation to the formation of insurers in relation to state incorporation.