Alabama Property and Casualty Practice Exam

A company chartered in Guam or Puerto Rico operating in New York is considered what type of company by New Yorkers?

1. Domestic company

2. Foreign company

3. Alien company

4. International company

The correct answer is: Foreign company

A company chartered in Guam or Puerto Rico and operating in New York is classified as an alien company because it is incorporated outside the continental United States. In the context of insurance and company classification, a domestic company is one that is incorporated within the state in question—in this case, New York. A foreign company is one that is incorporated in another state within the United States but operates in a different state. An alien company, however, refers specifically to companies that are chartered outside of the United States entirely. Since both Guam and Puerto Rico are U.S. territories and not states, the correct classification for a company chartered there but operating in New York is indeed an alien company. International company, while seemingly fitting, is not a term typically used in regulatory contexts concerning domestic insurance providers and does not denote the specific legal status that alien company does. Thus, the classification hinges on the distinctions made between domestic, foreign, and alien entities based on their state or country of incorporation.