When can insurance be sold through a surplus lines insurer?

Insurance can be sold through a surplus lines insurer when the coverage required is not available through an authorized carrier. Surplus lines insurance serves as a solution for risks that are too high for standard insurers or when traditional insurance markets cannot provide coverage options for specific types of risks. This situation may arise due to the unique nature of the risk, such as niche industries or properties that require specialized coverage.

Authorized carriers are those that are licensed and regulated in a particular state, and they may have limitations on the types of coverage they offer. When an insured party needs coverage that the authorized market cannot provide, they can turn to surplus lines insurers, which are not subject to the same regulatory requirements as licensed companies. This flexibility allows them to tailor coverage for non-standard risks that might be rejected by conventional insurers.