What is a key feature of surplus lines insurance?

• A. It is typically less expensive than standard policies
• B. It covers all types of risks without limitations
• C. It provides coverage for hard-to-insure risks
• D. It is only available to government entities

Answer: (C)

Surplus lines insurance is specifically designed to address risks that are difficult to insure through standard insurance markets. This is often due to the unique or high-risk nature of the coverage needed, which may not be adequately addressed by traditional insurance providers. As a result, surplus lines insurers can offer protection for businesses or individuals facing challenges in obtaining coverage through conventional channels, such as those in high-risk industries or unusual situations.

The option stating that surplus lines insurance is less expensive than standard policies is misleading, as pricing can vary widely based on the specific risks being insured. Similarly, the notion that surplus lines cover all types of risks without limitations is not accurate, as such coverage is usually tailored to specific risks that standard insurers cannot accommodate. Lastly, stating that surplus lines insurance is only available to government entities is incorrect, as it is accessible to a variety of clients, including private businesses and individuals needing specialized insurance solutions.