Compilation of Rules and Regulations of the State of Georgia › Department 120 - OFFICE OF COMMISSIONER OF INSURANCE, SAFETY FIRE COMMISSIONER AND INDUSTRIAL LOAN COMMISSIONER › Chapter 120-2 - RULES OF COMMISSIONER OF INSURANCE › Subject 120-2-89 - SURPLUS LINES INSURANCE REGULATION › Appendix (120-2-89) A

Current through Rules and Regulations filed through June 27, 2024
FREQUENTLY ASKED QUESTIONS
ABOUT YOUR SURPLUS LINES POLICY
Your broker has placed the insurance you requested in the
				  "surplus lines market" with one or more surplus lines insurers. By definition,
				  such surplus lines insurers are not licensed in the state, but this does not
				  mean that the transaction is not regulated. The surplus lines market is an
				  insurance marketplace that is established for the purpose of insuring unique or
				  hard to place risks. Some of the rules that apply to surplus lines insurance
				  policies and surplus lines insurance companies differ from those that govern
				  coverage obtained from insurance companies licensed in your state. In order for
				  you to better understand the surplus lines market and the rights you have in a
				  surplus lines transaction, the following material is provided.
Please read this brochure carefully, and should you have any
				  questions after reading the material, do not hesitate to ask your broker. If
				  you wish further information, please contact the Regulatory Services Division,
				  Room 604 West Tower, 2 Martin Luther King, Jr. Drive, Atlanta, Georgia 30334 or
				  (404) 656-2074 or toll free at (800) 656-2298 (request Regulatory Services
				  Division).
WHAT IS A SURPLUS LINES POLICY?
A surplus lines policy is a policy placed with an insurer
				  that is not licensed (or 'admitted') in this state, but is nonetheless eligible
				  to provide insurance on property or liability insurance protection to citizens
				  of this state through specially licensed agents or brokers known as surplus
				  lines brokers.
WHY AM I GETTING COVERAGE FROM A SURPLUS LINES
				  INSURER?
Your agent or broker may have been unable to obtain the
				  coverage you requested from insurance companies licensed in this state, but was
				  able to obtain coverage from an eligible surplus lines insurance company. The
				  reason for your agent or broker's action is that the risk or property for which
				  you sought coverage may be unique or have certain risk characteristics that
				  caused licensed insurers to decline to write the policy. In circumstances where
				  licensed insurers will not write the risk, your broker is authorized by state
				  law or regulation to obtain the coverage from a "surplus lines" insurer.
SINCE THE SURPLUS LINES INSURER IS UNLICENSED, IS THE
				  TRANSACTION UNREGULATED?
Surplus lines transactions are regulated by state law that
				  require that surplus lines policies be procured only by specially licensed
				  brokers. These are called surplus lines brokers and they are authorized to
				  transact business with certain unlicensed insurers that meet financial and
				  other eligibility standards set by the state. These insurers are known as
				  surplus lines insurers. Your agent may have worked with a licensed surplus
				  lines broker in securing your policy. Alternatively, your agent may hold a
				  surplus lines broker's license.
IS MY SURPLUS LINES POLICY COVERED BY THE STATE GUARANTY OR
				  INSOLVENCY FUND?
No. There is no guaranty fund for coverage for surplus lines
				  policies. The guaranty fund, which provides payments in the event that your
				  insurance company becomes insolvent, only covers policies of licensed
				  insurers.
HOW IS THE RATE OR PRICE OF A SURPLUS LINES POLICY
				  DETERMINED?
The rate or premium charged for a surplus lines policy is
				  determined by the surplus lines insurer. As unlicensed insurers, surplus lines
				  insurers do not file their rates or premiums with the state for review or
				  approval.
DOES THE GEORGIA DEPARTMENT OF INSURANCE REVIEW OR APPROVE
				  THE TERMS AND CONDITIONS OF THIS POLICY?
Pursuant to O.C.G.A. §
									33-5-21.1, policies of surplus
				  lines insurers are not reviewed or approved by the Georgia Department of
				  Insurance.
CAN MY POLICY BE RENEWED OR EXTENDED?
Your surplus lines policy may or may not be renewed or
				  extended when the policy expires. An extension of the policy coverage will be
				  dependent upon the continued unavailability of the policy coverage from
				  insurers licensed in this state and the willingness of the surplus lines
				  insurer to continue to accept the risk. Since a surplus lines policy is
				  generally not subject to the same notice requirements as a policy issued by a
				  licensed insurer, notice of a premium increase for a new policy term or the
				  company's intent not to extend the policy at the same terms and conditions
				  might not be provided until close to the date the policy expires. Therefore,
				  you should keep in contact with your agent or broker, particularly as the
				  expiration of the policy term nears, to ascertain the status of the policy and
				  to assure continuity of coverage.