Surplus lines insurance is an alternative type of property and casualty insurance coverage for consumers who cannot get coverage in the standard market. Standard insurance companies may choose not to write policies for specialty risk or high-risk situations such as extremely old homes located in coastal areas, expensive boats and cars, day-care centers’ liability needs, or medical malpractice needs, which may be insured by surplus lines companies.
Surplus lines insurers are regulated in the state or country in which they are domiciled. They may sell insurance in Louisiana once they have met eligibility requirements. They have more freedom and flexibility for accepting risks and designing and pricing their policies. They can tailor a policy to meet a specific risk and they are willing to cover risks that standard insurance companies are not. They typically have higher premiums because they insure risks that standard insurance companies will not accept and because the risks they are insuring are greater.
If a surplus lines company becomes insolvent, any claims you had could go unpaid. Surplus lines insurers do not participate in and their policies are not covered by the Louisiana Insurance Guaranty Association – LIGA - which pays claims in the event the standard insurance company becomes insolvent.
Act 203 of the 2013 Regular Session of the Louisiana Legislature liberalized the rules for obtaining surplus lines insurance coverage. The Act removed the requirement that standard insurance companies be unavailable prior to personal and commercial lines surplus lines placements. Act 203 also requires personal lines consumers to sign a form (Form 438) acknowledging that the insurance agent has informed him/her with respect to surplus lines insurance prior to placing coverage with a surplus lines insurer.
You can purchase surplus lines insurance by contacting a Louisiana licensed surplus lines insurance agent.