What must a surplus lines broker provide to the policyholder upon purchasing surplus lines insurance?

A surplus lines broker is required to provide a written disclosure statement to the policyholder upon purchasing surplus lines insurance. This requirement ensures that the policyholder is fully informed about the nature of the surplus lines insurance, as well as the fact that the coverage is not provided by a licensed carrier in the state. The written disclosure serves to highlight the differences between surplus lines insurance and standard insurance, including potential risks and coverage limitations.

Providing this statement is important for maintaining transparency and compliance with regulatory standards. It allows policyholders to make informed decisions based on their understanding of the policy structure and the implications of choosing a surplus lines insurance option. This practice fosters trust between the broker and the policyholder and ensures that consumers receive important information that might affect their coverage choice and experience.