Full Definition
Surplus lines insurance refers to coverage placed with non-admitted (unlicensed) insurance carriers when admitted (licensed) carriers are unwilling or unable to provide coverage. Surplus lines carriers are regulated differently — they are not members of state guaranty funds, and their rates and forms are not subject to state approval. This gives them flexibility to write unusual, high-hazard, or hard-to-place risks. A surplus lines broker must typically document that coverage was declined by a specified number of admitted carriers before placing coverage in the surplus lines market. Lloyd's of London is the most well-known surplus lines market.
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