What is necessary for placing surplus lines insurance when an admitted insurer's coverage is unavailable?

To place surplus lines insurance when coverage from an admitted insurer is unavailable, a diligent search is required. This process entails making a concerted effort to seek out coverage options from admitted insurers before turning to surplus lines. The purpose of the diligent search is to ensure that all possibilities through licensed, regulated insurers have been exhausted, demonstrating that the insurance market is unable to provide the necessary coverage.

By conducting this thorough search, the broker can document that an earnest attempt was made to obtain insurance from more traditional sources, thus justifying the use of surplus lines. In many states, including Michigan, this requirement helps protect consumers and ensures that surplus lines are utilized only as a last resort when no qualified, admitted insurers are available to offer adequate coverage.

While other responses may involve documentation or processes related to insurance, they do not address the foundational requirement that necessitates the transition to surplus lines insurance. The insurance application may be required to secure specific coverage, a market placement report could be used to record the search process or results, and a non-admitted risk certificate might be relevant in certain contexts, but none of these substitutes the importance of demonstrating a diligent search first.