What can a surplus lines broker do if coverage is not readily available?

A surplus lines broker plays a crucial role in the insurance marketplace, especially when traditional insurance options are not readily available for a client’s needs. In instances where coverage cannot be found through standard licensed insurers, the broker has the responsibility to conduct a thorough investigation—referred to as a "diligent search"—to explore potential alternatives.

This diligent search entails looking for suitable options within the surplus lines market, which consists of insurers that are not licensed in the state but can provide coverage for risks that are difficult to place. By adhering to this process, the broker ensures they are fulfilling their duty to the client by exploring all avenues before concluding that no options exist. This is fundamental to maintaining ethical standards and adequately serving the client's best interests.

Moreover, pursuing options through surplus lines insurers after diligent efforts aligns with regulatory requirements governing the conduct of brokers in the industry. Only after exhausting these possibilities can the broker reasonably inform the client about the state of the market and possible next steps.