What typically occurs if there is a dispute over a surplus lines claim?

In disputes over surplus lines claims, it is common for the involved parties—including the broker, insurer, and insured—to engage in negotiations or take legal action to reach a resolution. This collaborative approach helps ensure that all perspectives are considered and facilitates an agreement that is acceptable to all parties.

Negotiation is often the first step, as it can be more efficient and cost-effective than formal legal proceedings. However, if negotiations do not result in a satisfactory resolution, the parties may decide to escalate the issue to legal action, where a court or arbitrator can provide a binding decision. This process reflects the complexity and unique considerations of surplus lines insurance, where policies are often customized and regulations may differ significantly from standard insurance practices.

Other options do not accurately represent how disputes are typically handled within the surplus lines framework. Ignoring the issue would not be a reasonable or legal approach. Automatic payment by the insurer without question does not occur, as claims are subject to review and must meet specific criteria. Sending disputes to an independent authority for a final decision doesn't capture the typical process, which favors negotiation and resolution among the directly involved parties.