What is often a key characteristic of surplus lines insurance?

Surplus lines insurance is known for its ability to cater to unique or high-risk situations that are not adequately covered by standard insurance policies. While it does often serve high-risk individuals or businesses, stating that it is only offered to high-risk individuals does not capture the full scope of surplus lines insurance. Surplus lines can also cover risks that are unusual in other ways, not just those deemed high-risk.

A distinctive characteristic of surplus lines insurance is the flexibility it offers in terms of coverage options. This flexibility often leads to more customization, allowing policyholders to tailor their insurance to fit their specific needs. Additionally, surplus lines are often utilized when a risk may be too risky for standard carriers to underwrite because it does not meet their usual criteria for coverage.

While surplus lines may be utilized by high-risk individuals, it’s important to note that it isn't restricted solely to them. Businesses or individuals with unique risks, even if not classified as high-risk, might be served by surplus lines. Therefore, surplus lines can be considered a broad avenue for various coverage types, going beyond just high-risk classifications.

In terms of regulation, surplus lines are less regulated federally but are still subject to certain state regulations, which is essential to understanding their operational framework. This means