What does the term "Excess or Surplus Lines" refer to?

The term "Excess or Surplus Lines" specifically refers to specialized insurance coverages that are not typically offered by admitted insurance companies. Admitted companies are those that are licensed and regulated by the state, meaning they must adhere to specific guidelines and protections for policyholders. However, when standard insurers cannot provide coverage for unique or high-risk situations, surplus lines insurers step in to offer the necessary coverage.

Surplus lines products are essential in the insurance market because they fill gaps for risks that are either too high for traditional markets or too specialized, such as coverage for exotic cars, certain types of liability, or niche business needs that mainstream insurers do not cover. This flexibility enables businesses and individuals to secure necessary protection for their unique circumstances, ultimately helping to ensure broader risk management in various sectors.

The other options describe insurance in ways that do not align with the essence of surplus lines. Standard coverage available through most insurers would not qualify as excess or surplus since these coverages are widely available through admitted companies. Similarly, defining insurance plans that cover traditional risks or target low-risk clients does not capture the specialized, often higher-risk nature of surplus lines insurance.