Which of the following is true about eligibility for surplus lines insurance?

The correct statement regarding eligibility for surplus lines insurance indicates that this type of insurance must be placed with a nonadmitted insurer or an eligible surplus lines insurer. Surplus lines insurance is specifically designed to cover risks that standard admitted insurers cannot or will not insure. Nonadmitted insurers are typically not licensed in the state where the insurance is being sold, and they provide coverage for unique or high-risk situations that do not fit within the typical parameters of admitted insurers.

This point highlights the nature of surplus lines as a mechanism to provide coverage in the marketplace where traditional insurance options fall short. Agents and brokers must ensure that any surplus lines they place are with an eligible surplus lines insurer, as these entities specialize in handling certain risks that are otherwise uninsurable through regular channels.

The other options do not accurately reflect the nature of surplus lines insurance. While some surplus lines transactions may involve larger corporations, they are not exclusive to them. Additionally, surplus lines do not require prior approval from the state insurance commissioner for every placement, as they are designed to bypass some of the regulations that govern admitted insurers. Lastly, surplus lines insurance is explicitly meant for situations where coverage is difficult to obtain from admitted carriers, reinforcing the importance of working with nonadmitted insurers.