If part of a risk is acceptable to authorized insurers, how much of the risk should be placed with an eligible unauthorized insurer?

When dealing with surplus lines insurance, the primary guideline is that risks should first be evaluated by authorized insurers. If an authorized insurer accepts part of the risk, it indicates that they are willing to cover that portion under their terms and conditions.

In this case, placing an entire risk with an unauthorized insurer would suggest that all aspects of the risk need coverage or that the coverage needs exceed what authorized insurers can provide. However, this contradicts the general principle in surplus lines practice, which is to utilize authorized insurers as much as possible.

In situations where the part of the risk is accepted by authorized insurers, typically the excess—or in some cases the entire risk—should not be simply allocated to unauthorized insurers arbitrarily. Rather, after ensuring that authorized insurers are covering acceptable parts, the unaccepted portion can be addressed by unauthorized insurers. The focus is on what risk remains that cannot be adequately covered by authorized insurers.

Thus, the correct approach is to place only the portion not accepted by authorized insurers with an eligible unauthorized insurer, because surplus lines exists primarily to fill coverage gaps that authorized insurers cannot accommodate.