When is it necessary to use a surplus lines broker?

It is necessary to use a surplus lines broker when coverage cannot be obtained from admitted insurers. This situation arises when the standard insurance market does not provide a solution for unusual or high-risk insurance needs. Surplus lines brokers are specialized agents who work with non-admitted insurers, which are insurance companies that do not have a license to operate in a particular state but are authorized to provide coverage for unique or difficult risks.

Utilizing a surplus lines broker allows individuals or businesses to access coverage options that might be unavailable through traditional channels, effectively filling gaps in the market. This is particularly important in sectors where the risk is substantial or the nature of the coverage required is specialty in nature, such as for certain types of property, liability, or unique commercial operations.

In contrast, when coverage is available from admitted insurers, or when the risk is minimal or routine claims are involved, there is no need for a surplus lines broker. Regular agents and brokers can facilitate the procurement of these standard policies more efficiently.