What does a diligent search by a surplus lines broker entail?

A diligent search by a surplus lines broker is fundamentally about ensuring compliance with regulatory standards while also protecting the interests of the insured. This search involves confirming that the specific coverage the client seeks is not available through licensed insurers in the state.

In the context of surplus lines, which provide coverage for risks that standard markets are unwilling or unable to insure, a broker must demonstrate that they have explored all reasonable avenues. This means thoroughly seeking out potential coverage options from admitted carriers before resorting to the surplus lines market. The broker's role is to document this process and show that licensed insurers could not fulfill the client's needs, thereby justifying the placement of the coverage in the surplus lines arena.

This practice is critical as it not only complies with state regulations but also ensures that clients are presented with options that are genuinely necessary and appropriate for their unique risk profiles.