The key point of surplus lines is that an eligible surplus lines insurer may provide coverage only in what amount relative to authorized insurers?

The key point of surplus lines is that an eligible surplus lines insurer may provide coverage only in what amount relative to authorized insurers?

• A. The amount must be less than what authorized insurers can provide
• B. The amount must be equal to what authorized insurers can provide
• C. The amount must exceed what authorized insurers can provide
• D. There is no relation to authorized insurers' limits

Answer: (C)

Surplus lines are used to insure risks that standard, admitted insurers won’t cover or won’t cover at the needed limits. Because the purpose is to fill gaps beyond the capacity or willingness of authorized carriers, the coverage provided by a surplus lines insurer must exceed what authorized insurers can provide. In other words, you go to the surplus lines market only when the admitted market’s limits or terms aren’t enough, so the surplus lines policy takes on more coverage than the authorized market would offer.

Surplus lines are used to insure risks that standard, admitted insurers won’t cover or won’t cover at the needed limits. Because the purpose is to fill gaps beyond the capacity or willingness of authorized carriers, the coverage provided by a surplus lines insurer must exceed what authorized insurers can provide. In other words, you go to the surplus lines market only when the admitted market’s limits or terms aren’t enough, so the surplus lines policy takes on more coverage than the authorized market would offer.