What is a primary concern agents should anticipate when dealing with surplus lines insurance?

Surplus lines insurance deals with unique and high-risk situations that standard insurance markets often cannot accommodate. A primary concern for agents when handling surplus lines is the coverage scope and the fact that non-admitted insurers, which are not licensed in the state, can offer policies that differ significantly from what is typically available. These insurers can provide coverage for unusual risks or larger amounts than what standard markets allow, but they may also present challenges regarding policy language and reliability.

Understanding the specific coverage terms is essential because policies from non-admitted carriers can vary widely in what they actually cover. Agents need to be vigilant about ensuring that their clients fully understand the exclusions and limitations of these policies, as well as the financial stability and claims process associated with non-admitted insurers. This emphasis on coverage nuances is crucial to avoid misunderstandings that could lead to gaps in protection for clients.

While high premiums and excessive underwriting requirements could certainly be factors in surplus lines insurance, the critical concern revolves around the scope of coverage offered and the nature of non-admitted insurers. Knowing these aspects allows agents to serve their clients better and guide them through the complexities of surplus lines transactions.