How can a broker determine if a risk qualifies for surplus lines?

A broker can determine if a risk qualifies for surplus lines primarily by conducting a thorough market search. This process involves exploring the standard insurance market to find a willing insurer that can underwrite the specific risk. Surplus lines insurance is designed for unique or high-risk exposures that standard insurers may not be willing to cover.

When a broker performs a diligent market search, they evaluate the available insurance coverage options and ensure that the risk is truly uninsurable by admitted carriers. This is crucial because surplus lines coverage is only permissible when the risk cannot be placed with an admitted insurer that is licensed in the state. If a viable market is found in the standard lines, then the risk does not qualify for surplus lines.

Engaging with legal advisors, state regulators, or analyzing competitor policies can provide useful insights or data but do not directly confirm whether a particular risk can be placed in the surplus lines market. The primary responsibility lies with the broker to investigate the market to find a solution for the risk in question.