What is one key feature of surplus lines insurance?

One key feature of surplus lines insurance is that it provides coverage for risks that standard policies reject. Surplus lines insurance is specifically designed for cases where the normal or standard insurance market does not offer coverage. This can occur because the risk is deemed too high or unusual, meaning that traditional insurers may not be willing to assume that risk.

For example, surplus lines insurance often covers specialized industries or unique situations that don’t fit into the molds of conventional policies. This ability to underwrite high-risk or non-standard businesses is what makes surplus lines insurance an essential component of the overall insurance market, allowing businesses and individuals to obtain necessary coverage where they otherwise might not be able to.

In contrast, the other options do not accurately reflect the nature of surplus lines insurance. State insurance funds are not required to back surplus lines, meaning that this option is not applicable. Furthermore, surplus lines insurance is subject to different regulatory standards than admitted insurance, so they do not share the same requirements. Finally, surplus lines insurance is not limited to property damage; it can cover a wide range of risks beyond just property.