What is surplus lines insurance primarily designed to provide coverage for?

• A. High-risk individuals
• B. Standard business operations
• C. Risks that standard insurers avoid
• D. General liability insurance

Answer: (C)

Surplus lines insurance is specifically designed to address coverage needs that standard insurers typically avoid due to the higher level of risk involved. This type of insurance allows policyholders to access coverage for unique or unusual risks that may not fit the traditional underwriting criteria of standard insurance markets.

For instance, businesses or individuals engaged in high-risk activities, or those located in areas prone to certain catastrophic events, may find that conventional insurers either cannot provide coverage or do so at prohibitive rates. Surplus lines insurers fill this gap, offering customized policies that cater to these specific needs, thus ensuring that even the most challenging risks can be appropriately insured.

This reflects the essence of surplus lines insurance: it's geared toward providing options for those risks that might not be adequately addressed by the general insurance market.