Washington State Insurance Practice Exam

Surplus Lines insurance usually involves which type of individuals?

1. Low-risk individuals with clean records

2. Individuals seeking coverage outside their country of residence

3. High-risk individuals

4. New applicants who lack sufficient credit history

The correct answer is: Low-risk individuals with clean records

Surplus Lines insurance typically involves individuals who may be considered higher risk, such as those seeking coverage outside their country of residence or individuals with unique or specialized insurance needs that cannot be met by standard insurance companies. Low-risk individuals with clean records are more likely to obtain coverage from standard insurance companies, making option A less likely to be involved in Surplus Lines insurance. High-risk individuals are more closely associated with the types of risks covered by Surplus Lines insurance, making option C a common scenario. New applicants who lack sufficient credit history may also be considered higher risk and thus may seek coverage through Surplus Lines insurance, but this is not as specific as individuals seeking coverage outside their country of residence.