What additional requirement must be met when placing excess liability insurance?

When placing excess liability insurance, it is essential that the policy is placed through a licensed surplus lines broker. This requirement is in place because surplus lines insurance pertains to policies that are not available from admitted insurers within the state. A licensed surplus lines broker is knowledgeable about the specific market needs and regulatory requirements and is authorized to facilitate these unique insurance placements. This ensures that the coverage is compliant with state laws and provides the necessary protections for both the policyholder and the insurance provider.

The process of using a licensed surplus lines broker also helps to guarantee that the insurer is financially stable and capable of fulfilling policy obligations, which is crucial for the series of risks covered under excess liability insurance. Without the involvement of a licensed broker, there may not be proper oversight or adherence to the state's insurance regulations, potentially leaving the insured party unprotected or in violation of legal requirements.