Surplus Lines Insurance Flashcards

What is 'surplus lines' insurance in DC?

Answer: Insurance placed with non-admitted insurers for risks that cannot be placed in the admitted market

Surplus lines insurance is coverage placed with insurers not licensed (admitted) in DC for risks that admitted carriers are unwilling or unable to insure.

Who is legally authorized to place surplus lines coverage in DC?

Answer: Only a DC-licensed surplus lines broker with surplus lines authority

Only a producer holding a DC surplus lines broker license may legally place coverage with non-admitted insurers in the District.

Before placing coverage in the surplus lines market in DC, a broker must demonstrate which of the following?

Answer: A diligent search—typically three declinations from admitted carriers—showing the risk cannot be placed in the admitted market

A diligent search requirement (usually three admitted carrier declinations) must be documented before accessing the surplus lines market.

A DC surplus lines policy does NOT benefit from which protection available to admitted market policyholders?

Answer: DC Insurance Guaranty Association protection if the insurer becomes insolvent

Surplus lines policyholders are not covered by the DC Insurance Guaranty Association, which only protects insureds of admitted (licensed) carriers.

What is the DC surplus lines premium tax rate, and who is responsible for remitting it?

Answer: 3% of gross premium; remitted by the DC surplus lines broker

DC imposes a 3% surplus lines tax on gross premium, which the licensed surplus lines broker is responsible for remitting to DISB.

Which type of DC risk is most likely to require surplus lines coverage?

Answer: A vacant commercial building with prior fire losses that admitted carriers have declined

Hard-to-place risks like vacant buildings with prior fire losses—declined by multiple admitted carriers—are classic surplus lines placements.