An eligible surplus line insurer must have what added to the face of a policy issued in South Carolina?

In South Carolina, policies issued by surplus line insurers must include the statement “Is not afforded guaranty fund protection.” This requirement serves an important purpose: it informs the policyholder that the surplus lines coverage does not carry the same guarantees as policies sold by licensed insurers. Guaranty funds are designed to protect policyholders in the event of an insurer’s insolvency or inability to pay claims, ensuring that covered losses can still be compensated. However, surplus line insurers are not part of the state’s traditional insurance market and are not backed by these guaranty funds.

This notice helps to clarify the risks associated with purchasing insurance through surplus line markets, emphasizing that if the insurer were to fail, the policyholder would not have recourse to the guaranty fund. Potential policyholders can then make informed decisions, understanding the level of risk they assume by purchasing this type of insurance. Thus, the inclusion of this statement is crucial for transparency and consumer protection in the surplus lines market.