What does the term "non-admitted" refer to in surplus lines insurance?

The term "non-admitted" in surplus lines insurance specifically refers to insurers that are not licensed in a given state. This means that these insurers operate without a license from that state's insurance department, which is a key characteristic of surplus lines insurance. Such insurers can provide coverage that may not be available through licensed carriers.

The nature of surplus lines is to allow consumers to seek insurance options beyond what is typically available in the standard market, which is usually restricted to licensed insurers. Non-admitted carriers are used particularly for risks that are difficult to place in the standard market due to their unique or higher risks.

The other choices describe aspects of insurance that are not accurate in the context of surplus lines. For instance, licensed insurers operate under state regulations and provide coverage that meets state requirements, which is contrary to the definition of non-admitted insurers. Understanding this distinction is essential for recognizing how surplus lines insurance functions within the broader insurance market.