Which of the following is a common type of risk that may require surplus lines insurance?

Surplus lines insurance is specifically designed to provide coverage for risks that are often considered too high or unusual for the standard insurance market to underwrite effectively. Environmental liability is a prime example of such a risk. This type of insurance is necessary because traditional insurers may not cover claims related to environmental pollution, contamination, or other environmental hazards due to the potential for substantial financial liability and uncertainty in risk assessment.

Environmental liability insurance can address specific needs, such as coverage for clean-up costs or legal expenses related to pollution incidents. The complexities and evolving regulations in environmental law often create unique challenges that standard insurers may be unwilling to take on, making surplus lines an essential option for businesses facing these particular risks.