In what circumstance might a surplus lines policy become secondary in claims payment?

A surplus lines policy may become secondary in claims payment primarily when the client has other primary insurance. Surplus lines insurance is typically used when standard insurance markets cannot provide coverage for a particular risk, but it does not replace or supersede existing primary insurance policies. If a primary insurance policy is in effect, it will generally respond first in the event of a claim, and the surplus lines policy may only come into play once the limits of the primary insurance have been reached or if there are exclusions in the primary policy that the surplus lines policy covers.

In situations such as an error made by the broker, the lack of renewal of the policy, or unpaid premiums, these factors may lead to complications or voiding of the policy but do not inherently affect the order in which claims are paid. The presence of another primary insurance policy is the definitive reason a surplus lines policy would take a secondary role in claims payment.