A proprietor normally aims for an insurance to cover his business from sudden pitfalls. And with this interest alone, he searches for the best company to back him up and tries to apply for any coverage that he wants for his biz. However, it is not at all times that businesses get approved whenever they apply for business security coverage. This might be quite frustrating to hear, but it is true in the United States; however, an insurer called surplus lines insurance can get you covered on tough and disappointing times like this.
Common reasons of disapproval on insurance applications are: (1) questionable business stability; (2) the applying company does not meet the standard qualifications of a certain insurer’s policy; (3) the business is either considered substandard or unusual in terms of their procedures or income generation processes; and (4) the applicant company is just too big for the insurance company to handle. Any of the above mentioned reasons might lead to disapproval on insurance application requests which are a little disappointing especially to the business owners.
Nonetheless, the existence of surplus lines insurance gives you and your business the kind of coverage that legal and approved insurers in your state cannot provide you. It does not mean that the aforementioned insurers are not legal; they just have policies that are not approved by the state but are legally accepted to be operating as a biz as well. The only difference between the approved insurer and surplus insurers is that the latter can quote you prices that are not duly approved by the state. However, they are the only ones you can entrust your whole company with especially if you want to get some coverage to ensure business safety.
Now in looking for a good surplus lines insurance company to work for you, bear in mind that you should not trust any of them all the way immediately. You should see to it the insurer is licensed, but apparently not in your state but is welcome to operate there, has a good reputation in terms of giving policies and insurance for their customers to buy and keep, and is monitored by some agencies in the government that will ensure you of the safety of their whole operations. Take note that these companies should not be considered as frauds because it is not a reason that they are not licensed in your state, it is their choice to not operate as a legally approved insurer in your state but rather in a surplus running policy.
Moreover, you need to bear in mind that investing in a surplus line insurance does not guarantee you a 100% money back when the insurer fails because of bankruptcy. And this is the biggest challenge for you. The only consolation or better way for you to make sure that this would not happen to the company of your choice sooner (if not forever) is to conduct a research and background check. Do not always trust word of mouth. When you receive an information about a certain company, it is always safe to check the insurer by yourself. You can do this either by using the internet (if the said company has their own website) or maybe search for customer feedbacks about their service. Otherwise, you can physically visit their location and try to assess by questioning them things that you think will help you determine if their business is legit and trustworthy.