What is Surplus Lines Insurance?

The surplus lines market plays an important role in providing insurance for hard-to-place, unique or high capacity (i.e., high limit) risks. Surplus lines insurers are able to cover unique and hard-to-place risks because, as nonadmitted insurers, they can react to market changes and accommodate the unique needs of insureds who are unable to obtain coverage from admitted carriers. Surplus lines insurance is also generally more expensive than regular insurance because the risks are higher.

Risks typically written in the surplus lines market fall into three basic categories:
(1) non-standard risks, which have unusual underwriting characteristics;
(2) unique risks for which admitted carriers do not offer a filed policy form or rate; and
(3) capacity risks where an insured seeks a higher level of coverage than most insurers are willing to provide

What Are the Requirements?

Typically, agents must seek to place coverage in an admitted market first, and consider surplus lines options only when admitted markets are not available. Each state's requirements for writing surplus lines business may differ, including:

  • Number of admitted markets declining the risk
  • Affidavit forms that need to be submitted
  • Taxes or fees that need to be collected 

To learn more about the requirements in your state, follow the link below.

Eligibility & Filing Requirements by State