What is an example of a risk that might require surplus lines insurance?

Surplus lines insurance is specifically designed to cover risks that are unique, complex, or difficult to insure through traditional insurance markets. This often includes industries or activities that carry higher levels of risk, or for which standard insurers do not have adequate resources or appetite to provide coverage.

Environmental liability, such as pollution coverage for a manufacturing facility, represents a significant and specialized risk. Standard insurers may be hesitant to offer coverage for environmental liabilities due to the potential for large losses and the complexity involved in assessing these risks. As a result, businesses that deal with hazardous materials, pollutants, or have the potential for environmental damage often turn to surplus lines insurers to obtain the necessary coverage.

This type of insurance is tailored to address the specific needs associated with environmental hazards, which is not always adequately covered by standard market offerings. By utilizing surplus lines, businesses can acquire the specialized coverage they require to mitigate their unique risks related to environmental liabilities.

Homeowners insurance, automobile liability insurance, and worker's compensation are typically covered by standard insurance companies as they fall under more conventional classes of insurance with established underwriting criteria and readily available market options.