A consumer guide and answers to
common questions.

What is "surplus lines insurance"?
Surplus Lines Insurance is not a new type of insurance even though it may not be familiar to you. It is a type of insurance that protects unusual risks or exposures that the traditional "licensed insurer" will not insure. In Colorado you can legitimately purchase insurance from either "licensed insurance companies" or "approved surplus lines insurers". Licensed insurance companies are regulated by the Colorado Division of Insurance and must provide premium rate information and certify compliance for the policy forms they use. Approved surplus lines insurers must secure approval from the Colorado Division of Insurance but do not have to get approval for premiums or policy forms. Surplus lines insurance can only be procured by Insurance Producers who have been approved by the Colorado Division of Insurance for this type of business. They are called Surplus Lines Brokers.

Why is my insurance provided by an approved surplus lines insurer?
After extensive inquiries to the licensed insurers that your agent represents, it has been determined that the coverage that you require is unavailable from a licensed insurer. The reasons that the licensed insurer will not accept you is that you might present a higher risk than they are willing to take or you have had claims in the past.

Does the Guaranty Fund protect my surplus Lines policy?
NO. Colorado has a provision that if a licensed insurance company becomes insolvent, policyholders will be able to recover a portion or all of any loss up to a specified amount. This is called the Guaranty Fund. In the unlikely event of an insolvency an approved surplus lines insurer there is NO recourse from the Guaranty Fund.

Should I be concerned about the solvency of my surplus lines insurer?
A M Best, a nationally recognized analyst company, has determined that financial failures are no greater in surplus lines insurers than licensed insurers. In addition Colorado statures mandate that the Colorado Division of Insurance Monitors certain minimum financial requirements for surpluslines insurers writing insurance Colorado. Surplus lines insurers must apply annually to Colorado for approval to transact insurance. IN addition your agent will be able to you with a number of financial "ratings" that have been assigned to a particular surplus lines insurer. These ratings will reflect the size and proficiency of the insurer

Is a surplus lines insurer required to give Notice of Non Renewal, Cancellation or Changes in Premium or other policy terms?
NO. Surplus lines insurers are not subject to Colorado statutes which require these notices.

The Colorado legislature recognized that surplus lines insurers accept more hazardous risks than licensed insurers. Because of this they are exempt from these provisions. Your insurance agent should be in contact with the representative of the surplus line insurer to make sure that your interests are fully protected. As with any other legal document it is important that you read and understand any insurance policy.

Where can I get additional information
The Surplus Lines Association of Colorado is a non profit organization that will respond to questions about surplus lines insurance. While they cannot provide specific advice on your particular policy, they can provide background data and offer assistance to Colorado consumers. Their phone # is 303-331-9399. The Colorado Division of Insurance maintains a website that contains a list of the Approved Surplus Lines Insurers in Colorado. The web address is www.dora.state.co.us/insurance/. The Colorado Division of Insurance will investigate complaints against surplus lines insurers. Produced by the Surplus Lines Association of Colorado in cooperation with the Colorado Division of Insurance.