What is a characteristic of surplus lines insurance?

Surplus lines insurance is specifically characterized by being available through nonadmitted insurers. Nonadmitted insurers are those that are not licensed to operate in a particular state but can provide coverage for risks that admitted insurers may be unwilling or unable to underwrite. This market plays a crucial role in providing insurance for unique, high-risk, or specialized types of coverage that are not typically found in the admitted market.

The distinction between admitted and nonadmitted insurance providers is fundamental to understanding surplus lines insurance. Admitted insurers are regulated and must follow the state’s rules regarding rates and policy forms, whereas nonadmitted insurers have more flexibility in these areas and can cater to niche markets.

Surplus lines insurance does not include coverage that is necessarily required to be offered by admitted insurers, nor does it exclusively cover foreign risks. In fact, it covers a broad range of unique risks, but the defining characteristic remains its availability through nonadmitted insurers.