What can be said about the risks covered by surplus lines?

Surplus lines insurance is specifically designed to cover risks that are often uninsurable by standard insurers. This can include unique, high-risk, or niche markets that do not fit the criteria of conventional insurance policies. Standard insurers typically have strict underwriting guidelines and may refuse to cover certain types of risks due to their complexity, potential for loss, or the lack of historical data available to assess those risks adequately. As a result, surplus lines providers step in to offer coverage for these unusual or high-risk situations, often with different terms and conditions than those found in standard insurance policies.

The other options do not accurately reflect the nature of surplus lines insurance. Surplus lines do not generally cover low-risk situations, nor do they imply full insurance by admitted insurers or require state approval before being offered. Instead, they are a necessary alternative for risks that fall outside the typical scope of coverage offered by traditional insurers.