Surplus Lines Professional Liability Policies for Architects/Engineers
It is important to first understand what a surplus lines (non-admitted) policy is. Surplus lines is a policy that does not need not be filed with state insurance departments as a condition of being able to offer coverage. The types of risks typically insured in the surplus lines insurance markets can usually be categorized as risks with adverse loss experience, unusual risks, and those for which there is a shortage of capacity within the standard (admitted) market.
There are some scenarios in which your firm may need a surplus lines carrier to quote your insurance. If you have services that are outside of what the ‘admitted’ insurance company will quote. If your firms claim history is outside of what an admitted carriers guidelines. Or if your firms project types are outside of the admitted carrier’s appetite.
Surplus lines policies allow firms, who otherwise may not have been able to get insurance, be able to obtain a Professional Liability insurance policy. Many surplus lines companies are familiar names, such as Lloyds of London, and have been providing insurance for many years.
A few things to keep in mind when your firm is getting a surplus lines policy. There will be additional surplus lines taxes that your insurance agent will collect. Also, as a surplus lines insurer there is no protection under the provisions of the Colorado Insurance Guaranty Association Act, which assists insures when a company becomes insolvent. However, surplus lines insurance companies are rated by AM Best to show the financial stability of the company.
Be sure you review the surplus lines specimen policy prior to purchasing the policy. There are occasions that there are additional requirements of your firm when it comes to claims or providing additional information. Also, there may be different exclusions than what would be typically seen on the admitted carrier’s policies.
Please be sure to ask questions of your Professional Underwriter agent with regards to surplus lines policies.