What is a key characteristic of surplus lines insurance?

A key characteristic of surplus lines insurance is that it serves specialized or high-risk markets. Surplus lines insurance is designed to provide coverage for risks that are not available through the traditional insurance market, often due to their nature being unusual or high in risk. This includes coverage for unique industries, unusual property types, or risks that do not meet the underwriting standards of admitted insurers.

This feature is crucial as it allows businesses and individuals with specialized needs to find coverage that might otherwise be unattainable. For instance, if a business operates in a niche market or engages in activities deemed high-risk, standard insurers may decline to cover it due to stringent underwriting guidelines. Surplus lines insurance fills this gap by offering policies tailored to those specific needs, which may involve increased risk exposure and premium costs but ultimately provides a necessary safety net for those in unique situations.