What distinguishes a surplus lines insurance?

Surplus lines insurance is specifically designed to cover risks that are not available through standard, licensed insurers. This type of insurance often comes into play when an individual or business has unique or high-risk situations that traditional insurance markets are unwilling or unable to insure. Surplus lines insurers are typically not licensed in the policyholder's state, but they operate under specific regulations that allow them to provide coverage for these unconventional risks.

This distinction is important as it underscores the role of surplus lines in filling coverage gaps that standard insurance products do not address, thus providing a vital service in the insurance marketplace. Options addressing aspects of expense, mandatory coverage, or discounts do not capture the essential function of surplus lines insurance in bridging the gap for hard-to-insure risks.