Which entities typically require surplus lines insurance?

Surplus lines insurance is specifically designed to address the needs of businesses or individuals that face unique or high-risk exposures that conventional insurers are unwilling or unable to cover. This can include a wide range of situations, such as specialized industries, higher liability risks, or unusual property types. Because traditional insurance markets may find these risks too challenging or unpredictable, surplus lines serve as an alternative, enabling coverage to be obtained from non-admitted insurers.

In contrast, standard low-risk businesses generally find adequate coverage through conventional insurance markets, making surplus lines unnecessary for them. Insurance agents and brokers do play a crucial role in facilitating the procurement of surplus lines insurance, but they themselves do not directly require this coverage; their function is primarily to connect clients with the appropriate insurance resources. Similarly, while governmental agencies may encounter various risks, they often have access to specific types of coverage that differ from those typically found in the surplus lines market, meaning they do not inherently require surplus lines insurance as a standard practice.