Home › Dropped or can't get coverage

Surplus Lines Insurance (Non-Admitted Insurers)

Checked against official sources · Last reviewed October 13, 2026

Admitted vs. non-admitted insurance: the difference

An admitted insurer is licensed by your state's insurance department. In Texas, for example, the Office of Public Insurance Counsel explains that admitted insurers "have to follow Texas laws that protect consumers," that the Texas Department of Insurance "reviews most of the rates and policies" they sell, and that they pay into a guaranty association that "will pay your claims if your insurer becomes insolvent."

A non-admitted or surplus lines insurer is "not licensed" in your state. Surplus lines insurers "usually cover risks that admitted market companies aren't able to insure or aren't willing to insure," but they "can, however, also sell you policies that the admitted market sells, such as homeowners or flood policies" (Texas OPIC). The NAIC, the national group of state insurance regulators, describes the surplus lines market as "non-admitted specialized insurers covering risks not available within the admitted market."

Surplus lines is not unregulated. The NAIC says "it is the surplus lines transaction that is regulated": the licensed surplus lines broker must make sure the insurer meets the state's eligibility rules and must pay the state's surplus lines premium tax. California's required notice says these insurers should be licensed "either as a foreign insurer in another state in the United States or as a non-United States (alien) insurer." [1][2][3][5][11]

When homeowners end up with a surplus lines policy

If your insurer drops you (see our nonrenewal guide) and no regular insurer will take the home, surplus lines may be what's left. The California Department of Insurance (CDI) lays out the order to try:

1. Shop admitted insurers through local agents and brokers, and use CDI's contact list and comparison tools.
2. If no admitted insurer will write the home, the California FAIR Plan is "available to every homeowner as a last option for coverage." It covers only fire, lightning, internal explosion and smoke, so CDI recommends adding a difference in conditions policy.
3. "If none of these options work for you, you may try obtaining coverage in the non-admitted/surplus lines market. Ask your retail agent or broker if they are able to obtain coverage with a surplus lines insurer."

A California Assembly Insurance Committee background paper (March 2023) said surplus lines "are intended to also be a last resort because most often these policies are more expensive than the admitted market."

To learn what a state FAIR plan is and which states have one, see our FAIR plan guide. [11][12]

The "diligent search" rule: admitted insurers first

Many states let a broker place you with a surplus lines insurer only after trying admitted insurers first. The rules differ by state:

There are exceptions. In California, the search isn't required for coverages on the commissioner's "Export List" or for certain commercial insureds. Texas exempts certain large commercial buyers ("exempt commercial purchasers" and "industrial insureds"). [4][6][8][13][14][15][16][17][18]

No guaranty fund if the insurer fails

A state guaranty fund (also called a guaranty association) is funded by admitted insurers and, in the NAIC's words, "will pay claims should an admitted insurer become insolvent." Surplus lines policyholders don't get that protection. The NAIC: "guaranty fund coverage is not available" in the surplus lines market, though it adds that "the insolvency rate of surplus lines insurers is historically low."

State law says the same thing in the notices you will see:

• California: "The insurer does not participate in any of the insurance guarantee funds created by California law. Therefore, these funds will not pay your claims or protect your assets if the insurer becomes insolvent and is unable to make payments as promised."
• Florida: "Persons insured by surplus lines carriers do not have the protection of the Florida Insurance Guaranty Act to the extent of any right of recovery for the obligation of an insolvent unlicensed insurer."
• Texas: the insurer "is not a member of the property and casualty insurance guaranty association created under Chapter 462, Insurance Code." TDI adds that it does not "have the duty or responsibility to monitor their financial condition."

Surplus lines insurers must meet financial standards to be eligible. In California, a U.S. insurer generally needs capital and surplus totaling "forty-five million dollars ($45,000,000)" (Ins. Code §1765.1). In Texas, an eligible surplus lines insurer "must maintain capital and surplus in an amount of at least $15 million," except non-U.S. insurers on the NAIC's Quarterly Listing of Alien Insurers (Ins. Code §981.057). [1][3][5][6][19][20]

The disclosure notice you must get

States require a plain warning on surplus lines policies. Read it before you sign.

California. When you apply for a new surplus lines policy (not a renewal), you must sign a disclosure (the surplus lines industry calls it the D-1) printed "in boldface 16-point type on a freestanding document." The same notice must be on the front page of the policy. It starts: "The insurance policy that you [have purchased] [are applying to purchase] is being issued by an insurer that is not licensed by the State of California. These companies are called 'nonadmitted' or 'surplus line' insurers." It also says the insurer "is not subject to the financial solvency regulation and enforcement that apply to California licensed insurers." If you did not receive and sign the form, you "may cancel the insurance so placed," with premium refunded pro rata and "the return of any broker's fees." If coverage had to start right away (existing coverage lapsing "within two business days"), you can cancel "within five days of receiving this disclosure."

Florida. The first page of the policy must carry: "THIS INSURANCE IS ISSUED PURSUANT TO THE FLORIDA SURPLUS LINES LAW. PERSONS INSURED BY SURPLUS LINES CARRIERS DO NOT HAVE THE PROTECTION OF THE FLORIDA INSURANCE GUARANTY ACT TO THE EXTENT OF ANY RIGHT OF RECOVERY FOR THE OBLIGATION OF AN INSOLVENT UNLICENSED INSURER." Policies since Oct. 1, 2009 must also state, in at least 14-point bold type: "SURPLUS LINES INSURERS' POLICY RATES AND FORMS ARE NOT APPROVED BY ANY FLORIDA REGULATORY AGENCY." Before export, you sign or acknowledge: "You are agreeing to place coverage in the surplus lines market. Coverage may be available in the admitted market."

Texas. Every surplus lines policy, certificate or cover note must state, in 11-point type: "This insurance contract is with an insurer not licensed to transact insurance in this state and is issued and delivered as surplus line coverage under the Texas insurance statutes. The Texas Department of Insurance does not audit the finances or review the solvency of the surplus lines insurer providing this coverage." [3][5][6][14][15]

Fees and taxes on a surplus lines policy

Surplus lines policies carry a state premium tax that the broker collects and pays. The NAIC says the broker "remits payment of the surplus lines premium tax to the 'home state.'" Texas requires the policy to show "the premium and rate charged, and premium taxes to be collected from the insured."

Brokers may also charge fees. In Florida, both the surplus lines agent and the retail agent may charge "a reasonable per-policy fee," and each fee "must be itemized separately to the customer before purchase." Ask for every fee and tax in writing before you buy. [1][6][15]

How to check a surplus lines insurer

Get the insurer's exact legal name from the quote or policy (not just the broker's or program's name), then check:

• NAIC Consumer Insurance Search: the NAIC's Consumer Insurance Search shows an insurer's "financial condition, how long it has been in business, and its complaints over the past three years." The NAIC notes that "an insurance company may have different subsidiaries with different names."
• California: CDI keeps the List of Approved Surplus Line Insurers (LASLI) (current as of Sept. 15, 2026 when we checked). An insurer does not have to be on LASLI: "Eligible Carriers" meet the law's standards but "CDI does not pre-approve these carriers," and non-U.S. insurers on the NAIC's Quarterly Listing of Alien Insurers are also eligible. Questions: CDI at 1-800-927-4357.
• Florida: the Office of Insurance Regulation's Surplus Lines Company Search has two main lists. An OIR-eligible insurer "is subject to a financial review as part of the application process." A "Federally Authorized" surplus lines insurer "does not file an application with OIR" and is not "subject to a financial review by OIR prior to conducting business in Florida." The Florida Surplus Lines Service Office also lists eligible insurers.
• Texas: the Surplus Lines Stamping Office of Texas (SLTX) and TDI both publish eligible-insurer lists. SLTX notes TDI "does not officially approve these insurers." TDI says "It is the responsibility of the licensed Texas surplus lines agent to determine the eligibility and financial solvency of these insurers."

If you have a problem with a surplus lines policy or broker, contact your state insurance department. [3][7][8][9][10][19][21][22][23]

Questions people ask