Excess and surplus lines insurance may be written when which condition is met?

Excess and surplus lines insurance is specifically designed for situations where standard insurance cannot be obtained. This scenario typically arises when an insurance risk is too unique or high for admitted carriers to cover. The requirement to demonstrate a diligent effort to place the insurance with an authorized carrier is essential because it shows that the broker has attempted to exhaust all options before turning to surplus lines insurers. This diligent effort protects consumers by ensuring that they are first given access to standard market options. When such efforts are documented and unsuccessful, then surplus lines can be utilized to ensure that coverage is available for those unique or high-risk scenarios that the regular market cannot accommodate.

The other options do not accurately reflect the requirements or circumstances surrounding excess and surplus lines insurance. Simply having lower premiums or high premiums does not satisfy regulatory requirements for placing coverage into surplus lines. Additionally, being out of state does not alone justify the placement of insurance in this category; rather, it is the inability to find coverage with authorized carriers that is the key factor.