What is Surplus Lines Insurance?

Surplus lines insurance covers unusual and unique risks, risks with a high exposure, or unusual and hard-to-place risk classes that standard insurance market providers will not write. Surplus lines companies are not required to be "admitted" in any state and are not subject to rate and form approval of state insurance departments. With less direct review, surplus line insurance companies have the flexibility to customize rates and manuscript coverage forms that best suit the needs of their insureds.

If the Insurance Company is not licensed in every state, how does the insurance broker or the insurance buyer know if the company will pay claims?

While surplus lines insurers are not regulated by the state, and the insurance company operates as a non-admitted insurer, every state does set a specific minimum financial standard that the surplus lines insurer must meet at the time any insurance coverage is placed with a surplus lines company. Every state maintains an approved list of surplus lines insurers authorized to conduct insurance business in the state. Some insurers, such as the Prime Insurance Syndicate, have on deposit in the United States a claims guarantee fund to make payment on claims if an insurer becomes insolvent.