Surplus Lines
Key Takeaway
Insurance placed with non-admitted carriers that are not licensed by the state department of insurance. Surplus lines coverage is used when admitted market carriers cannot or will not provide adequate coverage for a particular risk.
Definition
Insurance placed with non-admitted carriers that are not licensed by the state department of insurance. Surplus lines coverage is used when admitted market carriers cannot or will not provide adequate coverage for a particular risk. Surplus lines policies are not backed by state guaranty funds, but they offer more flexible terms and pricing.
Why This Matters for Law Firms
Regulatory requirements vary by state and are evolving rapidly. Law firms must stay current with these terms to maintain compliance with bar association rules, state insurance regulations, and client disclosure obligations. Non-compliance can result in disciplinary action, fines, or uninsured exposure.
Example Usage in Context
An attorney completing their annual bar registration might see this referenced: "The state bar asks about surplus lines status. Make sure our firm's records are current and our response is accurate."
Related terms
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