What does "binding authority" allow a surplus lines broker to do?

Binding authority grants a surplus lines broker the power to legally obligate a non-admitted insurer for specific coverage. This means that the broker can enter into an insurance contract on behalf of the non-admitted insurer, ensuring that the client has the necessary coverage from that insurer without needing further consent from the insurer after the agreement is finalized. This authority is crucial in the surplus lines market, where traditional admitted insurers may not provide adequate coverage options for unique or higher-risk situations.

In practice, this allows brokers to act flexibly and efficiently to meet their clients' insurance needs, often resulting in quicker policy implementations. The other options do not accurately capture the essence of binding authority. For example, negotiating premiums, increasing coverage limits, or altering terms typically require different types of authority or approval from the underwriting parties involved.