What does a “diligent search” refer to in surplus lines insurance?

A "diligent search" in the context of surplus lines insurance refers to the efforts made to locate suitable coverage from admitted insurers. This concept is pivotal because surplus lines are utilized when the necessary coverage cannot be obtained from the standard market of admitted insurers—those that are licensed and regulated in a specific state. The diligent search process ensures that the broker or agent has actively sought coverage options in the admitted market prior to turning to surplus lines markets, emphasizing the need to explore all viable avenues to fulfill an insurance requirement. This is a regulatory requirement aimed at the protection of consumers, ensuring that they receive appropriate and available coverage before resorting to non-admitted or surplus lines insurers, which do not offer the same level of consumer protections.