What is Surplus Lines Insurance?

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Surplus lines carriers must be licensed in the state where the insurance carrier is based. Also, the surplus lines insurance market is regulated, just like the admitted insurance market. However, because they are not required to follow state guidelines, surplus lines insurance carriers are not covered by the state insurance fund reinsurance which would cover their claims if they went out of business.

While this is an important distinction between non-surplus lines (aka “admitted” insurance carriers) and surplus lines carriers, it’s important to note that some surplus lines carriers have higher ratings than some admitted carriers by AM Best and other ratings agencies.

You can get surplus lines insurance for personal or business and commercial lines. Companies that write surplus lines insurance include Lloyds of London, Chubb, Travelers, Liberty Mutual, Markel, AIG, Berkshire Hathaway and many other smaller niche players.

Surplus lines insurance is a great thing, in fact, because without the surplus lines market, many new business concepts and innovations, such as blockchain technology, cryptocurrencies, green energy products and services such as wind and solar farms and energy storage, would not be able to find insurance - or afford insurance.