Which types of policies can be classified as surplus lines?

Surplus lines refer to insurance coverage provided by insurers that are not licensed in the state's local market, often used to cover risks that are difficult to place with admitted carriers. Specialty lines such as aviation and marine are typically classified as surplus lines because they encompass unique or high-risk exposures that standard insurers may avoid or be unwilling to cover due to their complexity and the level of risk involved.

For instance, aviation insurance often involves unique risks associated with flight operations and accidents, and marine insurance covers risks related to watercraft and transportation of goods over water. These types of insurance may not meet the criteria that standard market policies do, necessitating the use of surplus line insurers, which are established to provide coverage for these niche markets when mainstream insurance cannot.

In contrast, standard home insurance policies and automotive insurance are commonly available through licensed insurers and are considered "admitted" insurance because they meet regulatory standards, making them less likely candidates for surplus lines classification. Life insurance policies also fall under traditional coverage and are typically issued by licensed providers in the market. Thus, surplus lines primarily consist of those lines that address specialized or high-risk scenarios, making specialty lines like aviation and marine the correct answer.