DC Surplus Lines Insurance

Question 1

What is 'surplus lines' insurance in DC?

Accepted Answer

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

Answer

Insurance sold by insurers with more capital than required by DC

Answer

Insurance sold through the federal government for high-risk businesses

Answer

Reinsurance purchased by DC admitted insurers

Question 2

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

Accepted Answer

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

Answer

Any DC-licensed insurance producer

Answer

The insured may place coverage directly with a non-admitted insurer

Answer

Only a DC-domiciled managing general agent (MGA)

Question 3

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

Accepted Answer

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

Answer

That the risk is a new business with no insurance history

Answer

That the insured has agreed to waive guaranty association protections

Answer

That the non-admitted insurer is licensed in the insured's home state

Question 4

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

Accepted Answer

DC Insurance Guaranty Association protection if the insurer becomes insolvent

Answer

The right to file a complaint with DISB

Answer

The right to receive a copy of the policy

Answer

The right to cancel the policy within a free-look period

Question 5

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

Accepted Answer

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

Answer

3% of gross premium; remitted by the non-admitted insurer directly to DISB

Answer

5% of gross premium; remitted by the insured

Answer

1% of gross premium; remitted by the admitted insurer that declined the risk

Question 6

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

Accepted Answer

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

Answer

A standard single-family home in a low-risk neighborhood

Answer

A new DC restaurant with no prior claims history

Answer

A DC government employee seeking individual health coverage