Limited Lines Licenses: A Guide to Limited Lines of Insurance

by Dan Tromblay, CLU, ChFC, FLMI, CDEi | Sep 22, 2020
Limited Lines Licenses: A Guide to Limited Lines & Personal Lines of Insurance

Many new professionals beginning their insurance career and prepping for their license may ask— What is a limited lines license? How is it different from a general lines license or a personal lines license? Are the requirements different for a limited lines license? And what are the advantages of having a limited lines license instead of a general lines license?

Due to a lack of uniformity between states, there is often confusion about limited lines of authority, their licensing requirements, and how they differ from major lines and other limited lines. In this article, we’ll answer questions about limited lines including what a limited lines license can cover, state requirements for limited lines licensing and renewal, and some advantages of having a limited lines license over a general lines license.

What Is a Limited Lines License?

A limited lines license is a license authorizing the sale, solicitation, or negotiation of a line of insurance other than one of the six major (or general) lines defined by the National Association of Insurance Commissioners (NAIC). These major lines of insurance include each of the following:

  • Life
  • Accident and Health or Sickness
  • Property
  • Casualty
  • Variable Life and Variable Annuity Products
  • and Personal Lines* (but see below for more on personal lines)

Any other specific lines of insurance (for example, credit insurance or bail bond insurance) are considered limited lines. Because limited lines licenses are more limited, producers with a general lines license are usually able to write insurance covered by a limited line without needing additional licensing.

All in all, there are over 50 various limited lines licenses offered throughout the U.S. However, the Uniform Licensing Standards issued by the NAIC caps the amount of limited lines a single state may offer to no more than nine. Additionally, the Uniform Licensing Standards requires each state’s limited lines offerings to include the following four “core limited lines”:

  • Car rental insurance
  • Credit insurance
  • Crop insurance
  • Travel insurance

Other common forms of limited lines licenses include lines that cover bail bond insurance, title insurance, pet insurance, legal expense insurance, portable electronic insurance, self-storage insurance, and more.

Personal Lines License vs. Limited Lines License

In the section above, we listed “Personal Lines” as a major line of authority — and officially, the NAIC does list personal Lines as one of the six required major lines. Despite this, personal lines of authority are typically treated as a limited line, since a Personal Lines Property & Casualty license is more limited than a General Lines Property & Casualty license (as a General Lines P&C license can sell commercial insurance in addition to personal insurance, whereas a Personal Lines P&C license cannot).

Texas Limited Lines Property & Casualty License

An exception to the above is the Texas Limited Lines Property & Casualty license, which is unique in the U.S. and distinct from the Texas Personal Lines Property & Casualty license. The Texas Limited Lines Property & Casualty license incorporates several of the other core limited lines and gives producers the authority to sell any of the following:

  • job protection insurance
  • crop insurance
  • any line of insurance authorized for a farm mutual insurance company
  • motor vehicle insurance
  • manufactured home property insurance
  • industrial fire insurance
  • credit insurance
  • prepaid legal services offered by non-profit legal services corporations.

The Texas Limited Lines P&C license is more limited than the Personal Lines P&C license, and an agent with a Texas Personal Lines P&C license can sell any line of insurance sold under the Texas Limited Lines P&C license without requiring additional licensing.

Requirements for a Limited Lines License

The regulatory requirements for issuance of limited lines licenses varies widely from state to state, even for lines covering the same insurance. For example, looking only at rental car limited lines licenses in various states:

  • Some states require rental car companies to obtain a limited lines license.
  • Some states require rental car companies and one employee at each rental location to obtain a limited lines license.
  • Some states require rental car companies and a managing employee to obtain a limited lines license.
  • Some states require rental car companies and every employee working at the counter to obtain a limited lines license.
  • Some states require rental car companies and a designated responsible producer to obtain a limited lines license.
  • Some states do not require a limited lines license where travel-related coverages are offered concurrently with the rental of a motor vehicle.

In addition to the requirements varying between states, limited lines in a single state may have varying requirements as well. For example, Alaska requires passing an exam in order to receive its title, bail bond, crop, portable electronics adjuster, and credit licenses; but Alaska does not require completing an exam to receive its portable electronics producer, travel, or vehicle rental agency licenses.

Advantages of Limited Lines Licenses

There are several advantages to holding a limited lines license over a general lines license. For one, limited lines are largely exempt from many of the compliance requirements associated with the major lines of insurance, although this does vary by state and specific license.

For example, producers applying for a limited line of authority in some states are exempt from taking an exam or completing a pre-licensing course, although this is not universal. Additionally, a producer who holds only a limited lines license may be exempt from the continuing education (CE) requirements in their state, especially if the state doesn’t require an exam or pre-licensing course to receive the license.

Note that any exemption from CE requirements applies ONLY to the limited line of authority and not for any other major line of authority the agent may hold. Producers should always carefully review the specific licensing approval and renewal requirements for each license in their resident state through their state’s Department of Insurance website or the State Requirements section of the WebCE catalog.

As mentioned above, Alaska requires passing an examination in order to receive some limited lines licenses but not others. Even if states don’t require passing an exam in order to receive the license, they may still require the insurers themselves to educate their producers about their limited lines before appointing them.

Limited Lines Exam Prep & Online Courses Made Easy

In order to help insurance professionals interested in limited lines or personal lines obtain their license and grow in their career, WebCE is expanding our limited lines and personal lines exam prep and CE course offerings.

WebCE’s convenient, easy-to-use online platform makes completing exam prep and continuing education painless and stress-free, and with WebCE, insurance professionals can complete their courses from home on their own schedule and at their own pace.

To see our course offerings for your state, click to visit the WebCE course catalog below.

WebCE Course Catalog