What does ‘diligent search’ entail in the context of surplus lines insurance?

The term 'diligent search' in the context of surplus lines insurance refers to the requirement that an insurance producer must actively seek coverage from a sufficient number of admitted insurers before turning to the surplus lines market. This often means contacting at least three admitted insurers to see if they can provide the necessary coverage for a client’s specific risk.

This process helps ensure that the insurance buyer has explored all available options within the standard market before looking to surplus lines, which are typically used for risks that are not easily insurable by admitted carriers. By reaching out to multiple admitted insurers, the insurance producer demonstrates their commitment to finding a viable solution while also adhering to regulatory requirements intended to protect consumers.

In contrast, limiting efforts to a single insurer, focusing solely on the cheapest options, or only consulting unadmitted insurers does not meet the diligent search standard, as these actions may not adequately assess the market for suitable coverage alternatives.