What must an insured acknowledge when obtaining coverage from a surplus lines broker?

When obtaining coverage from a surplus lines broker, the insured must acknowledge that the insurer is non-admitted and be aware of the differences in coverage that may exist. A non-admitted insurer is one that is not licensed in the state where the insured resides, which often means that it does not have to follow the same rules and regulations that admitted insurers do. This could lead to variations in policy terms, coverage limits, or claims processes compared to traditional policies.

Understanding that the insurer is non-admitted is crucial because it affects the protection that the insured has in terms of state insurance department oversight. Non-admitted carriers may also have unique underwriting guidelines and risk assessments that differ significantly from admitted insurers. This acknowledgment ensures that the insured is fully aware of the potential risks and benefits associated with obtaining insurance through a surplus lines broker.