December 16, 2019
What Does Surplus Lines Cover and How Do You Buy It?
Surplus lines insurers handle a broad range of business risks. These are some examples of the types of risk commonly insured by excess and surplus lines insurers:
- A developer re-building homes and businesses in a hurricane-prone area
- A new business, especially in an industry that has frequent claims, such as roofers and pawn shops
- A sports or media celebrity who wants to insure against an injury that could jeopardize their future earning capacity
- A school district building a new high school
- A nonprofit that seeks to provide food, medical care and education in Third World countries
- A research lab working on a promising, yet unproven new drug
- A law firm specializing in intellectual property work.
Accessing Specialty Markets
Surplus lines companies sell their products through special brokers — called surplus lines brokers or wholesalers — and through managing general agents (MGAs). MGAs (which can be individuals or business entities) hold “appointments” from insurance companies, which give them the authority to solicit insurance applications from agents and negotiate coverage. MGAs generally specialize in particular types of risks and know which insurers are most likely to accept your risk.
The end customer has no direct access to those agents or to the non-admitted market. The good news is you do not need access. When we learn that you have an unusual risk, we discuss it with you and then contact the appropriate wholesaler or MGA to obtain the coverage you need.
Regardless of your special risk exposures, the process of finding the right coverage is largely invisible to you. We place the coverage and you receive a policy, just as you do with your standard property/casualty insurance.