How does the definition of "surplus lines" primarily differ from regular insurance?

The definition of "surplus lines" is primarily concerned with the types of risks that are not typically covered by traditional insurance markets. Surplus lines insurance is designed specifically for unusual or high-risk situations that standard insurers may be unwilling or unable to cover due to their inherent riskiness. This includes unique businesses, large-scale construction projects, or specific types of liability that do not fit into conventional underwriting criteria.

In contrast, other options do not accurately reflect the nature of surplus lines. For instance, surplus lines can cover both personal and commercial insurance, not just personal insurance. Additionally, while surplus lines policies can sometimes have competitive pricing, it is not universally true that they always have lower premiums compared to traditional policies. Lastly, while surplus lines often face different regulatory standards, they are not entirely unregulated; they simply operate under a different set of regulations than traditional insurance, which can sometimes make compliance less burdensome.

Overall, the main distinction lies in the ability of surplus lines to address high-risk concerns and niches that the standard market has not engaged, making the first option the most accurate choice.