Which type of insurance may cover risks that private insurers avoid?

Surplus lines insurance is designed to cover risks that conventional private insurers typically avoid. This type of insurance is used for high-risk coverage scenarios where standard policies are either unavailable or limited. Surplus lines insurers can provide coverage for unique, specialized, or high-risk situations that do not fit into traditional underwriting guidelines. This flexibility allows them to accept applications and provide coverage when other insurers might decline them due to the inherent risks involved.

In contrast, admitted insurance refers to policies written by insurers that are licensed to operate within a particular state, following state regulations and pricing guidelines. Basic life insurance provides essential life coverage but generally does not address high-risk scenarios. Homeowners insurance covers property and liability risks associated with residential properties but is typically not aimed at unusual or elevated risks that require surplus lines coverage. This distinction highlights the unique role surplus lines insurance plays in the insurance marketplace.