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Surplus Lines Insurance in Michigan

Surplus lines insurance in Michigan is a type of commercial insurance that can offer coverage where standard commercial insurance companies will not. If the insurance risk is too high for insurance companies licensed to operate in the state, the surplus lines companies from out of state and from other countries step in to help.

All U.S. surplus lines insurance companies are regulated by the states where they are domiciled and also abide by the Michigan surplus insurance laws.

Some of the features of surplus lines insurance include:

  • Surplus lines insurance policies often come with higher premiums than policies available from licensed insurers in the regular (local) market, due to the higher risk nature of the coverage.
  • Compared to standard commercial insurance policies, surplus lines insurance can be obtained from any insurance company operating in other states.
  • The insurer issuing surplus lines insurance is not licensed in the state where the policy is being written.

What is an Example of Surplus Lines Insurance?

In Michigan, the following are common risks covered by surplus line insurers:

Most Common Examples of Surplus Insurance Use in Michigan
Business Start-ups When a new business opens up, commercial insurance coverage may be hard to purchase due to the lack of a business track record. If the regular insurers cannot provide the coverage, a surplus insurer will.

After the business gets established and accepted by regular insurance companies - switch to a non-surplus insurer to save money.

Evolving Risk If the business is participating in or developing a new technology or business - a surplus insurer may be your best bet.

For example, a Cannabis business in Michigan may have to be insured by a surplus lines insurer.

If the business does work with people’s personal information and needs Cyber insurance against the hacks, surplus insurance is frequently the answer.

Unique Risk Surplus lines insurance provides unique coverage for unusual or highly specialized risks that traditional insurers do not typically offer, such as insurance for sporting events, medical malpractice, pollution, and vacant building coverage.

What Purpose Do Surplus Companies Serve in Michigan?

If a business cannot find coverage that fits its needs, your insurance agent will offer you ro use a surplus line insurance company. The business purpose of surplus line insurance is to provide you with a policy that you were unable to purchase within Michigan because of the unique risk or the high-risk characteristics of your business or the risk that you are seeking to cover is cost prohibitive. In this circumstance, it is legal for a surplus line agent to provide insurance coverage to you through a surplus line insurer.

Speak with a Michigan-licensed commercial insurance agent to help your business find the best surplus line insurance coverage to manage its unique risks.

How Are Surplus Lines Insurers Regulated in Michigan?

Surplus line insurance companies are not licensed to operate as regular insurers in Michigan and the state has limited regulatory authority over such companies.

All insurers that offer surplus coverage in Michigan are regular insurance companies in their states, which for their reasons choose to offer only surplus insurance in Michigan. The U.S.-based insurers are each domiciled in their home state and must conform to the regulations posted by their state’s Departments of Insurance.

Surplus line coverage is purchased through state-licensed agents who are authorized to sell surplus policies in Michigan. If your agent is not licensed to sell surplus lines insurance in Michigan, you might have to look for another broker or agent to secure your policy. You can check the status of your agent's license on the DIFS website. Likewise, you can contact the DIFS via email or at (877) 999-6442, Monday through Friday, from 8:00 a.m. to 5:00 p.m., for more information regarding an insurance agent.