Washington State Insurance Practice Exam

Why might someone choose excess and surplus lines insurance?

1. For peace of mind against common risks

2. To protect high-value standard risks

3. To cover unique or high-risk situations not handled by standard insurers

4. For lower premiums

The correct answer is: To cover unique or high-risk situations not handled by standard insurers

Choosing excess and surplus lines insurance is often driven by the need to address unique or high-risk situations that are not adequately covered by standard insurers. This type of insurance is specifically designed to provide coverage for risks that traditional insurance companies may deem too high or unusual to insure. Standard insurers typically have strict underwriting guidelines and may not offer policies for certain specialized industries, unusual property types, or high-risk activities. Excess and surplus lines carriers, on the other hand, have greater flexibility and can craft policies tailored to the specific needs of clients facing these unique circumstances. This allows businesses and individuals with unconventional risks to gain the necessary coverage to protect themselves adequately. While peace of mind, protection against high-value standard risks, and pricing may be considerations for selecting insurance, they do not capture the primary purpose of excess and surplus lines insurance, which fundamentally addresses coverage gaps that standard markets cannot accommodate.