How do surplus lines policies generally differ from admitted insurance policies?

Surplus lines policies are typically not subject to the same state regulations as admitted insurance policies. Admitted insurance is regulated by state insurance departments, which impose specific requirements on coverage, rates, and the financial stability of the insurers. In contrast, surplus lines insurance is designed to cover risks that admitted insurers are unwilling or unable to insure. This lack of regulation means that surplus lines policies can be more flexible in terms of coverage options and pricing structures, allowing brokers to tailor policies to meet the unique needs of their clients.

While some options mention aspects such as coverage level, cost, or the type of clients served, these do not accurately reflect the fundamental regulatory distinction between surplus lines and admitted insurance. The regulatory framework impacts how surplus lines can operate, which ultimately influences their characteristics compared to admitted policies.