What does the term "diligent search" refer to in the context of surplus lines insurance?

The term "diligent search" in the context of surplus lines insurance refers to the requirement for an insurance producer to thoroughly seek coverage from three or more admitted insurers before turning to surplus lines insurers. This is essential because surplus lines insurance is intended to provide coverage when traditional insurance markets are unable or unwilling to offer the needed coverage. By conducting a diligent search, producers demonstrate that they have made a genuine effort to find coverage that meets the client's needs among licensed companies.

This process safeguards against unnecessary reliance on surplus lines insurance, which can often be more expensive and may not have the same regulatory protections. Therefore, the correct understanding of "diligent search" emphasizes the importance of exhausting all possible options with admitted carriers before considering surplus lines coverage.