How is independently procured insurance defined?

Independently procured insurance is specifically defined as insurance that is acquired directly by an insured from a surplus lines insurer, rather than through a retail agent or broker. This type of insurance is often sought when traditional insurance options are unavailable or insufficient to meet the unique needs of the insured.

This definition is crucial because it highlights the direct relationship between the insured and the surplus lines insurer, which is integral to understanding the surplus lines market. The surplus lines market consists of insurers that are not licensed in the insured’s state but can provide coverage for risks that standard insurers are unwilling to cover, thus allowing businesses and individuals to obtain necessary protection for specialized risks.

Other options refer to different aspects of the insurance industry. For instance, acquiring insurance through brokers typically involves a retail insurance agent, which does not align with the definition of independently procured insurance. Similarly, insurance provided by licensed state insurers refers to traditional insurance that doesn't address the surplus lines model. Lastly, reinsurance contracts represent an entirely different form of insurance arrangement, where one insurer takes on risk from another insurer, which is also not relevant to the definition in question.