What essential information must a surplus lines broker disclose to the insured?

A surplus lines broker plays a crucial role in providing insurance coverage that is not available in the standard market. One of the key responsibilities of a surplus lines broker is to ensure that the insured has a clear understanding of the coverage they are purchasing. This includes disclosing the financial stability of the insurer, which is essential for the insured to evaluate the reliability of the coverage being offered. If an insurer is not financially stable, the insured risks not being able to file claims or receiving payouts when needed.

Additionally, understanding coverage limitations is vital for the insured. These limitations outline what is not covered under the policy, helping the insured make informed decisions about their risk exposure. Without this information, the insured could face significant gaps in coverage or find themselves surprised by exclusions when they need to make a claim.

This combination of financial stability and coverage limitations ensures that the insured is making informed choices and is aware of potential risks associated with the insurance product. It highlights the broker's duty to maintain transparency and provide crucial information that affects the policyholder's decision-making process, ensuring that they are adequately protected.