What does the term "Diligent Search" refer to in surplus lines insurance?

The term "Diligent Search" refers to a regulatory requirement confirming the unavailability of coverage in the context of surplus lines insurance. This process involves agents conducting a thorough search to determine whether the insurance coverage sought by the client is available from authorized insurers in the standard market.

If an agent can demonstrate that they have made a genuine effort to find coverage from licensed carriers and are unable to do so, it establishes the basis for placing the insurance with a surplus lines carrier. This requirement serves as a safeguard to ensure that surplus lines insurance is only utilized when traditional options are exhausted, thus protecting consumers and maintaining the integrity of the insurance market.