What must agents disclose if an Exempt Commercial Purchaser requests to place coverage with a surplus lines insurer?

When an Exempt Commercial Purchaser requests to place coverage with a surplus lines insurer, agents are required to disclose that coverage may or may not be available from the admitted market. This is crucial because it emphasizes the nature of the surplus lines insurance market, which is often used when traditional admitted insurers are unable or unwilling to provide coverage for specific risks.

This distinction is important for the client to understand their options. Since Exempt Commercial Purchasers often have specialized coverage needs that may exceed the appetite of admitted insurers, making them aware that the surplus lines market might be their only option aids in informed decision-making. This requirement ensures transparency and helps manage expectations regarding the availability of alternative coverage through admitted insurers.

The other options, while they touch on relevant aspects of surplus lines and commercial insurance, do not accurately capture the primary disclosure obligation in this scenario. Instead, they either introduce unnecessary implications about the nature of the coverage or suggest procedural steps that are not directly aligned with the core duty to inform about the availability of coverage options.