What are excess and surplus lines in insurance?

Excess and surplus lines insurance refers to policies that provide special coverage for unique or high-risk scenarios that standard insurance markets typically do not cover. This type of insurance is designed for risks that are unusual or exceed the limits of traditional insurance policies. For example, industries or activities that carry exceptional risks, such as certain types of construction projects or operations in high-risk environments, might require excess and surplus coverage.

Since standard insurance companies often have strict underwriting guidelines, they may be unable to accommodate these specialized needs. Therefore, excess and surplus lines serve a critical role in the insurance marketplace by ensuring that businesses or individuals with unique risk profiles can find appropriate coverage solutions. Consequently, this distinction makes option B the correct choice, as it accurately describes the nature of excess and surplus lines in insurance.