Which type of risks does surplus lines insurance cover that standard markets may not?

Surplus lines insurance is specifically designed to cover unique or specialized risks that standard insurance markets typically do not or cannot accommodate. This includes specialized industries and offshore risks, which often involve activities or circumstances that are outside the scope of standard underwriting guidelines and may present higher levels of risk or unique conditions.

For example, businesses operating in niche sectors, such as deep-sea fishing, aviation, or alternative energy, may have exposure to hazards that traditional insurance providers are not set up to assess or underwrite. Surplus lines insurers can offer tailored coverage solutions that reflect the distinctive needs and risks of these industries, often including more flexible terms, conditions, and coverage limits.

The other types of risks mentioned, such as common residential property risks, low-cost insurance items, and basic general liability risks, are typically well-covered by standard insurance markets, which have established programs and guidelines for underwriting these more conventional risks. Thus, they do not necessitate the specialized approach that surplus lines insurance provides.