What is one key characteristic of surplus lines insurance?

Surplus lines insurance is specifically designed to cater to unique or high-risk situations that standard insurance markets are unable or unwilling to cover. This type of insurance provides coverage for risks that are more complex, atypical, or exceed the limits of traditional policies. Businesses or individuals may seek surplus lines coverage for specialized needs, such as certain types of natural disasters, specific types of liability risks, or niche industries that do not fit traditional underwriting guidelines.

This characteristic is essential because it highlights the function of surplus lines as a solution for those risks that cannot be adequately addressed by the regular insurance market. Surplus lines insurers often have more flexible underwriting criteria, allowing them to provide coverage where typical insurers may decline applications. The unique nature of the risks involved means that surplus lines can play a critical role in ensuring adequate protection for those insured against uncommon or severe hazards.