Are surplus lines policies generally more expensive than traditional insurance policies?

Surplus lines policies are typically more expensive than traditional insurance policies primarily due to the higher risks they are designed to cover. These policies are often utilized when additional risks cannot be adequately addressed by standard insurance markets, such as unique, specialized, or high-risk ventures. Insurers providing surplus lines coverage usually operate with less regulatory oversight, allowing them the flexibility to tailor coverage options to meet specific needs. This increased risk and opportunistic pricing strategy contributes to higher premiums.

Traditional insurance policies usually have a more extensive consumer base and lower-risk profiles, allowing for more competitive pricing structures and often resulting in lower premiums. Thus, the inherent complexities and risks associated with surplus lines lead to their higher expense compared to conventional insurance offerings.