What is the primary purpose of surplus lines insurance?

The primary purpose of surplus lines insurance is to allow consumers to purchase property and liability insurance from non-admitted insurers. Surplus lines insurance is designed to address situations where traditional insurance markets cannot provide coverage for specific risks, usually due to those risks being too unique, complex, or risky for admitted carriers. Admitted insurers are those that are licensed to operate within a state and are subject to state regulations, including rate approval and policy forms.

When a risk is uninsurable by admitted insurers, surplus lines allows brokers to turn to non-admitted insurers, which are not subject to the same strict regulations. This flexibility enables coverage for a broader range of risks, including unusual or higher-risk situations that standard insurers may avoid. Consequently, surplus lines insurance fulfills the crucial role of providing options for consumers and businesses that might otherwise struggle to find appropriate insurance solutions.