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Posted By: Kenny Cole

As previously stated, most states have funds that protect insureds, up to a certain limit, if they have a claim and the insurer becomes insolvent. At least here, surplus lines insurers aren't part of the state Guaranty Fund so insureds with a surplus lines policy have no recourse against the fund if the carrier goes under.

The other difference, at least here, is that insurance agents are statutorily considered the agents of the carrier with respect to all matters pertaining to issuance of the policy, with the exception of agents who are selling surplus lines coverage. They are statutorily considered to be the insured's agent. It can make a pretty big difference in certain types of lawsuits, but probably isn't that big a deal otherwise.

Kenny Cole