Every home should have enough homeowners insurance to cover the cost to rebuild in case of a disaster. But it can be difficult to find adequate coverage if your property faces a heightened risk of damage or loss. Some insurance companies, for example, may refuse to cover homes in coastal areas, while others may not cover any property with a prior water damage claim.
If you’ve been repeatedly denied coverage and feel you’ve exhausted all of your options, consider purchasing a policy through a surplus lines company. In this guide, we’ll break down what surplus lines insurance is and how to know when it’s right for you.
What is surplus lines insurance?
Surplus lines insurance is a special type of insurance coverage designed for unique properties and risks that aren’t insurable on the standard or admitted market. Often referred to as excess & surplus insurance, many surplus lines carriers also offer “excess” insurance policies that increase your coverage limits beyond the maximum amount provided under a different policy.
Who needs surplus lines insurance?
If you’re not able to purchase homeowners insurance through a standard insurance company, then homeowners insurance through a surplus lines company is likely your best bet. You also may have the option of getting a policy through your state’s FAIR Plan, which is similar to surplus lines insurance in that it covers risks not eligible for coverage on the standard market.
Here are a few commons reasons why you may not be eligible for standard homeowners insurance coverage:
High-risk location: If your home is in a high-risk location, like a coastal area in Texas or Florida, or a heavily wooded area prone to wildfires in California, you may not qualify for standard insurance due to the high risk of tropical storm or wildfire damage.
Special or uncommon risks: If your property has unique or unconventional risks that fall outside of a company’s underwriting guidelines, like a home with knob and tube wiring or a frequent history of losses, then it won’t be able to quote you a rate and you’ll be denied coverage.
High coverage limits required: If your primary insurance policy doesn’t have high enough limits to cover the full value of your home and belongings, you can purchase an excess insurance policy that kicks in after you’ve exhausted the limits of the primary one.
You can find out if you need surplus lines insurance rather quickly if you shop for home insurance through an independent insurance marketplace like Policygenius, as we work with a mix of big and small admitted carriers in each state, while also offering surplus coverage options.
Initially, we’ll attempt to place you with one of our admitted carriers. But if we’re not able to find you a policy and the reason for denial is consistent from carrier to carrier, such as your home’s location or unique property features, then you’ll likely need to purchase a surplus lines policy.
Learn more >> The best high-risk home insurance companies of 2023
Surplus lines carriers vs. admitted carriers: What’s the difference?
There are two distinct differences between surplus lines and admitted companies that you should be aware of when deciding on a policy for your home:
Surplus lines policies are not reviewed by state regulators. This means they can include policy exclusions, restrictions, and limitations that you won’t find in a home insurance policy written by an admitted company. On the flip side, this lack of oversight also allows E&S companies to cover risks, provide more protection, and offer higher deductible options than what’s allowed on the standard market.
Surplus lines insurance is not financially backed by the state’s guaranty fund. This means if your house is damaged in a disaster and the surplus lines carrier goes bankrupt or doesn’t have the funds to pay out your claim, you could be left covering these costs out of pocket.
While you may not be protected under the state's guaranty fund when you purchase a surplus lines policy, most customers won't have to worry about their insurance company going bankrupt. In fact, the rate of surplus liners insurers going insolvent is "historically low" thanks to effective solvency monitoring frameworks on the state level, according to the National Association of Insurance Commissioners. 
Types of surplus lines insurance
Surplus lines companies offer a variety of high-risk insurance policies for different property types and risks that standard insurance providers won’t cover, from flood insurance in high-risk flood zones to log cabins in wildfire-prone areas.
Here are the most common types of residential surplus lines insurance coverage options available through Policygenius.
Surplus lines companies often offer the same type of residential property coverage as standard companies, including home, condo, and dwelling property policies. Also known as “multi-peril” insurance coverage, they cover the insured structure from several causes of damage or loss, including fire, lightning, theft, and wind.
Learn more >> What does home insurance cover?
Surplus lines insurers are also a popular option for homeowners looking for a private flood insurance alternative to the standard National Flood Insurance Program (NFIP) policy offered by the federal government. Private flood insurance policies typically come with building coverage limits of up to $1 million or higher, broader and higher limits of coverage for personal belongings, and a reduced waiting period.
Excess flood insurance
In addition to standalone policies, many surplus carriers also offer excess flood insurance that kicks in once you’ve tapped out the coverage limits on your primary flood insurance policy. Excess flood insurance is most commonly purchased to supplement the NFIP flood insurance policy, which comes with limited coverage for your home and belongings.
Wind-only coverage has become increasingly necessary in coastal counties of southern states where insurance companies often exclude wind coverage from home insurance policies, if they offer home insurance at all. If this is the case, you’ll need to purchase a wind-only policy from a surplus lines company to ensure your home is protected against tornadoes, hurricanes, and other severe windstorms.
Learn more >> What is windstorm insurance and when do you need it?
Builders risk insurance
Most standard home insurance policies don’t cover homes under construction. If you’re responsible for purchasing insurance for the build, you can get builders risk insurance (also known as course of construction insurance) from a surplus lines insurer to cover the project from start to finish.
Learn more >> How does builders risk insurance work?
Surplus lines insurance companies
Policygenius’ main E&S carrier partner is Orchid Insurance, a surplus lines brokerage that offers E&S coverage options from several reputable companies in all 50 states. If we place you with Orchid Insurance, your insurance policy will likely be through one of the following companies:
The Andover Companies
Lloyd’s of London
Keep in mind that Orchid is a managing general agent (MGA), or middle man, between you and the carrier responsible for paying out your claim. This means the process of changing your policy coverage or filing a claim could take more time compared to if your policy was managed by the carrier.
While the slightly convoluted policy management and customer service process certainly has its drawbacks, Orchid only works with carriers with an AM Best credit rating of A- or higher. In other words, you can rest assured that whichever carrier you’re placed with should be able to pay out your claim in the event of a disaster.
If you need to report a claim, we provided an up-to-date list of contact numbers and emails for each of Orchid’s carrier partners. You should be able to locate which carrier to contact as well as your policy number in the first few pages of your Orchid policy.
Where to find surplus lines insurance in your state
There are currently 16 surplus lines insurance organizations in 15 states, including California, Colorado, Florida, Louisiana, and Texas — five states where the surplus lines insurance market is on the rise in high-risk coastal and wildfire areas.
The table below lists each state’s surplus lines organization phone number and website. Click through to your state’s website for more information about surplus lines coverage as well as which companies offer it.
Surplus lines organization