{ "$schema": "https://bestinsuranceresearch.com/llms-full.txt", "recordType": "coverage", "id": "surplus-lines-california", "canonicalUrl": "https://bestinsuranceresearch.com/insurance/surplus-lines-california", "contentVersion": "2026.08.31", "generatedFor": "2026-09-06", "operator": { "legalName": "WJB Services, Inc.", "dba": "Bollinsure Insurance Services", "license": "6013787", "licenseAuthority": "California Department of Insurance" }, "license": "Text on this page may be quoted with attribution and a link to the canonical URL.", "notice": "Public page facts only. This record contains no visitor question, no tool input, and no identifier. It is not a coverage determination, an eligibility decision, or individualized advice.", "name": "Surplus lines (California)", "line": "surplus-lines", "family": "commercial", "definition": "Not a line of insurance so much as a route to one. When no admitted California insurer will write a risk, a licensed surplus line broker may place it with a nonadmitted insurer instead. What changes is not the coverage but the protections around it: the insurer is outside California's solvency regulation and outside every guarantee fund the state has created, and the buyer must be told so in writing, in boldface, before the placement. Almost everything a reader needs to know about this route is written in statute rather than in a form.", "protects": [ "A risk that admitted insurers will not write, by opening a market that is otherwise closed to it", "The buyer's right to know what they are buying, through a signed disclosure that must be given before the placement and repeated on the policy", "The buyer's ability to unwind the placement if that disclosure was never obtained", "A minimum standard for the insurer itself, in capital, surplus and home-state licensing" ], "commonlyCovers": [ { "item": "Risks the admitted market has actually declined", "note": "A surplus line broker may place with a nonadmitted insurer only where the insurance cannot be procured from insurers admitted for that class and actually writing that type in California. Type of insurance means the hazard or combination of hazards the contract covers, so the test is about the specific hazard rather than about the industry." }, { "item": "Risks so unusual that fewer than three admitted insurers write them at all", "note": "A diligent search is shown prima facie either by three admitted insurers that actually write the type declining the risk, or by there being fewer than three admitted insurers who write the type at all. The second limb is the one that carries genuinely novel exposures." }, { "item": "A commercial insured that asks for the nonadmitted market in writing", "note": "The diligent search requirement does not apply to a commercial insured as defined in section 1760.1(b) where the broker has disclosed in writing that surplus insurance may or may not be available from the admitted market with greater protection and more regulatory oversight, and the insured has then requested the placement in writing. Both conditions are required and both must be in writing." }, { "item": "A short continuation of cover already placed", "note": "An extension by the same nonadmitted insurer of the same risks for the same insured under an existing surplus lines policy sits outside the section, provided it does not exceed 90 days in aggregate in any 12-month period, does not change coverage, terms, conditions or limits, and is priced pro rata on the existing rate." } ], "commonlyExcludes": [ { "item": "Any protection from the California guarantee funds", "note": "The prescribed notice states that the insurer does not participate in any of the insurance guarantee funds created by California law, and that those funds will not pay your claims or protect your assets if the insurer becomes insolvent and is unable to make payments as promised. This is the substantive difference between admitted and nonadmitted cover, and it is stated in the statute's own words rather than paraphrased here." }, { "item": "California solvency regulation and enforcement", "note": "The same notice states that the insurer is not subject to the financial solvency regulation and enforcement that apply to California licensed insurers. Eligibility under section 1765.1 sets a floor on capital, surplus and home-state licensing; it does not import California's supervision." }, { "item": "A placement made only to get a cheaper rate", "note": "Insurance may not be placed with a nonadmitted insurer for the purpose of procuring a rate lower than the lowest an admitted insurer will accept. A placement at a lower rate than the lowest obtainable from an admitted insurer is conclusively presumed to violate the section unless a statement is filed at attachment describing the insurance, the rate, the nearest procurable admitted rates and the reasons." }, { "item": "Ocean marine, aviation and railroad, which sit outside the chapter", "note": "Reinsurance of an admitted insurer's liability, ocean marine and transit cover, aircraft and spacecraft insurance, and insurance on the property or operations of interstate railroads are outside the chapter's placement limits and reporting requirement. Three of those may still only be placed through a special lines' surplus line broker, so being outside the chapter is not the same as being unregulated." }, { "item": "Placement by anyone other than a licensed surplus line broker", "note": "A person in California may not transact insurance for a home state insured with a nonadmitted insurer except by and through a surplus line broker licensed under the chapter." } ], "limitsAndDeductibles": [ "There is no statutory limit structure here, because surplus lines is a route rather than a coverage form. Limits and deductibles are whatever the nonadmitted insurer's own form provides, and that form is not filed with or approved by California.", "The insurer must, at the time of placement, be licensed to write the type in its domiciliary jurisdiction and hold capital and surplus totalling forty-five million dollars.", "The commissioner may accept less than forty-five million dollars on an affirmative finding of acceptability, weighing management quality, any parent's capital and surplus, underwriting and investment trends, market availability and the company's record and reputation, but may never make that finding below four million five hundred thousand dollars.", "An insurer not domiciled in a United States state or territory qualifies by being listed on the NAIC International Insurers Department Quarterly Listing of Alien Insurers and licensed where it is domiciled.", "Eligibility can end without warning: the commissioner may issue an order without prior notice and hearing on determining that an insurer is no longer eligible.", "A surplus line broker owes a tax of 3 percent of gross premiums less return premiums, payable annually on or before March 1 for the preceding calendar year. Late payment carries a penalty of 10 percent plus interest of 1 percent per calendar month or fraction of a month from the due date.", "Where one transaction with one underwriter or group produces several policies, the entire premium across all of them is treated as a single premium for the tax." ], "endorsements": [ { "item": "The signed disclosure statement", "note": "Not an endorsement but the document that governs the placement. It must be obtained at the time of accepting the application, must be boldface 16-point type on a freestanding document, must be signed by the applicant personally rather than under a limited power of attorney, and must be kept by the broker for at least five years and produced to the insured or the commissioner on request." }, { "item": "The same notice on the policy itself", "note": "Every policy issued by a nonadmitted insurer and every certificate evidencing the placement must carry or have affixed the same statement in boldface 16-point type on the front page. If it is not on the front of your policy, that is a fact about the placement and worth raising." }, { "item": "The standardized diligent search form", "note": "Filed with the commissioner setting out the efforts made with admitted insurers and their results, signed by a licensed person who made the search or supervised whoever did. The commissioner may review it for accuracy, including whether the insurers named actually write that type and whether they declined, and may discipline the signer for a misrepresentation made negligently or intentionally." } ], "relatedPolicies": [ "Commercial general liability, commercial property and commercial auto, which are the lines most often placed this way when the admitted market declines", "Reinsurance of an admitted insurer's liability, which section 1760.5 puts outside the chapter entirely [S:ca-ins-code-1760-5]", "Ocean marine and inland transit, placed through a special lines' surplus line broker rather than under the ordinary chapter limits [S:ca-ins-code-1760-5]" ], "underwritingInputs": [ "The specific hazard or combination of hazards to be covered, because that is what type of insurance means for the search test [S:ca-ins-code-1763]", "Which admitted insurers actually write that type in California, as opposed to which are merely licensed for the class [S:ca-ins-code-1763]", "Declination evidence from three such insurers, or evidence that fewer than three write the type at all [S:ca-ins-code-1763]", "Whether the buyer meets the definition of a commercial insured in section 1760.1(b), which the broker is responsible for establishing [S:ca-ins-code-1763]", "The name and address of the insured and verification that the insured is a home state insured, both of which go into the 60-day report [S:ca-ins-code-1763]", "A description of the subject and location of the risk [S:ca-ins-code-1763]", "The premium charged, and the declarations page or the broker's certificate or binder [S:ca-ins-code-1763]", "The proposed insurer's domicile, home-state licensing and capital and surplus, or its presence on the NAIC alien insurers listing [S:ca-ins-code-1765-1]" ], "stateVariations": [ { "state": "CA", "note": "This page is California law throughout. The surplus line regime is state law, and while the federal Nonadmitted and Reinsurance Reform Act made the home state the single taxing and regulating authority for a placement, the substance of the diligent search, the disclosure and the eligibility standard is in the California Insurance Code. Another state's rules will differ in all three." }, { "state": "CA", "note": "Some classes sit outside the chapter's limits and reporting altogether: reinsurance of an admitted insurer, ocean marine and transit, aircraft and spacecraft, and interstate railroad property and operations. Ocean marine, aviation and railroad may still only be placed through a special lines' surplus line broker, so a placement being outside the chapter does not make it unlicensed territory." } ], "effectiveDate": "2026-09-05", "lastReviewed": "2026-09-05", "author": "Aaron Bollinger", "reviewer": "Brian Bollinger", "sourceIds": [ "ca-ins-code-1760-5", "ca-ins-code-1763", "ca-ins-code-1764-1", "ca-ins-code-1765-1", "ca-ins-code-1775-5" ], "sources": [ { "id": "ca-ins-code-1760-5", "title": "California Insurance Code Sections 1760.5 and 1761 (what falls outside the surplus line chapter, and who may place the rest)", "publisher": "California Legislative Counsel (leginfo.legislature.ca.gov)", "url": "https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS§ionNum=1760.5", "sourceType": "statute", "jurisdiction": "CA", "authorityLevel": "primary-law", "primary": true, "publishedDate": "unknown", "effectiveDate": "unknown", "accessedDate": "2026-09-05", "lastChecked": "2026-09-05", "updateCadence": "Amended only by legislation.", "status": "active", "supportsClaims": [ "Section 1760.5(a) provides that the chapter's provisions limiting the insurance that may be placed with nonadmitted insurers, and requiring a report of it, do not apply to reinsurance of the liability of an admitted insurer.", "Section 1760.5(a)(2) excludes insurance against perils of navigation, transit or transportation upon hulls, freights or disbursements or other shipowner interests, upon goods and other personal property in the course of exportation, importation or coastwise transportation including war risks, and marine builder's risks, drydocks and marine railways including ship repairer's liability and protection and indemnity insurance, but excluding insurance covering bridges or tunnels.", "Section 1760.5(a)(3) excludes aircraft or spacecraft insurance, and section 1760.5(a)(4) excludes insurance on property or operations of railroads engaged in interstate commerce.", "Section 1760.5(b) provides that the insurance specified in paragraphs (2), (3) and (4) may be placed with a nonadmitted insurer for a home state insured only by and through a special lines' surplus line broker.", "Section 1761(a) provides that except as provided in sections 1760 and 1760.5 and in section 1761(b)(1) and (2), a person within this state shall not transact any insurance for a home state insured with nonadmitted insurers except by and through a surplus line broker licensed under the chapter and upon the terms and conditions prescribed in the chapter." ] }, { "id": "ca-ins-code-1763", "title": "California Insurance Code Section 1763 (diligent search before placing surplus line insurance)", "publisher": "California Legislative Counsel (leginfo.legislature.ca.gov)", "url": "https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS§ionNum=1763", "sourceType": "statute", "jurisdiction": "CA", "authorityLevel": "primary-law", "primary": true, "publishedDate": "unknown", "effectiveDate": "unknown", "accessedDate": "2026-09-05", "lastChecked": "2026-09-05", "updateCadence": "Amended only by legislation.", "status": "active", "supportsClaims": [ "Section 1763(a) permits a surplus line broker to solicit and place insurance for a home state insured with nonadmitted insurers only if that insurance cannot be procured from insurers admitted for the particular class or classes of insurance and that actually write the particular type of insurance in this state.", "Section 1763(a) makes each surplus line broker responsible to ensure that a diligent search is made among insurers that are admitted to transact and are actually writing the particular type of insurance in this state before procuring the insurance from a nonadmitted insurer.", "Section 1763(a) requires the surplus line broker to file with the commissioner, within 60 days of placing any insurance for a home state insured with a nonadmitted insurer, a written report that shall be kept confidential, including the name and address of the insured, verification that the insured is a home state insured, the identity of the insurer or insurers, a description of the subject and location of the risk, the amount of premium charged, and a copy of the declarations page or of the broker's certificate or binder.", "Section 1763(a) requires the broker to file a standardized form prescribed by the commissioner setting forth the diligent efforts to place the coverage with admitted insurers and the results of those efforts, signed by a person licensed under the code who made the diligent search or who supervised an unlicensed person or persons who actually conducted it.", "Section 1763(b) provides that it is prima facie evidence that a diligent search among admitted insurers has been made if the standardized form establishes that three admitted insurers that actually write the particular type of insurance in this state have declined the risk, or that fewer than three admitted insurers actually write the particular type of insurance.", "Section 1763(b) permits the commissioner to review the form for the accuracy of the information on it, including whether the listed insurers actually write that type of insurance and whether the three insurers declined the risk, and to take disciplinary action against the person signing the form for any misrepresentation made through negligence or as the result of an intentional act.", "Section 1763(a) provides that the insurance shall not be placed with a nonadmitted insurer for the purpose of procuring a rate lower than the lowest rate that will be accepted by any admitted insurer, except as provided in subdivision (c).", "Section 1763(c) provides that it shall be conclusively presumed that insurance is placed in violation of the section if it is actually placed with a nonadmitted insurer at a lower rate or lower premium than the lowest obtainable from an admitted insurer, unless at the time the insurance attaches a statement is filed with the commissioner describing the insurance, specifying the rate and the nearest procurable rates from admitted insurers, and explaining why the insurance must be placed with a nonadmitted insurer even though it is available from an admitted insurer.", "Section 1763(c) provides that unless the commissioner notifies the filing broker within five days that the placement appears to violate the section, the broker may maintain the insurance in effect, and that a broker who is ordered to terminate the insurance within 10 days of such a notice and fails or refuses to do so violates the section.", "Section 1763(e) defines type of insurance, for purposes of the section, as the hazard or combination of hazards covered by a contract of insurance.", "Section 1763(g) provides that the section does not apply to an extension of coverage by a nonadmitted insurer of or for the same risks and to the same insured under an existing surplus lines policy, that such an extension may not exceed 90 days in the aggregate during any 12-month period, that it may not include a change in coverage, terms, conditions or limits, and that any additional premium shall be determined pro rata on the same rate as the existing policy.", "Section 1763(h)(1) provides that the diligent search requirement does not apply to a commercial insured as defined in Insurance Code section 1760.1(b) when the surplus line broker has disclosed in writing to the commercial insured that surplus insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight, and the commercial insured has subsequently requested in writing that the broker procure or place surplus insurance from a nonadmitted insurer.", "Section 1763(h)(2) makes the surplus line broker responsible to ensure that the applicant is a commercial insured, and provides that a broker who reasonably relies on information provided in good faith by the applicant, whether directly or through a producer, is deemed to be in compliance with that requirement.", "Section 1763(d) provides that statements filed under the section are not subject to public inspection unless the commissioner determines that the public interest or the welfare of the filing broker requires that a statement be made public.", "Section 1763(f) provides that the section does not apply to insurance issued or delivered in this state to a home state insured by a nonadmitted Mexican insurer through a surplus line broker affording coverage exclusively in the Republic of Mexico on property located, or operations conducted, temporarily or permanently within the Republic of Mexico." ] }, { "id": "ca-ins-code-1764-1", "title": "California Insurance Code Section 1764.1 (surplus line insurance disclosure notice)", "publisher": "California Legislature, California Legislative Information (leginfo)", "url": "https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS§ionNum=1764.1", "sourceType": "statute", "jurisdiction": "CA", "authorityLevel": "primary-law", "primary": true, "publishedDate": "unknown", "effectiveDate": "n/a", "accessedDate": "2026-08-31", "lastChecked": "2026-09-05", "updateCadence": "Amended by the California Legislature from time to time; verify the current text on leginfo before relying on it.", "status": "active", "supportsClaims": [ "The required notice states that the insurance policy is being issued by an insurer that is not licensed by the State of California.", "The required notice states that the insurer is not subject to the financial solvency regulation and enforcement that apply to California licensed insurers.", "The required notice states that the insurer does not participate in any of the insurance guarantee funds created by California law, and that those funds will not pay claims or protect assets if the insurer becomes insolvent.", "The disclosure must appear in boldface 16-point type on a freestanding document, and must be signed by the applicant.", "The disclosure must also be included in boldface 16-point type on the front page of the policy.", "Section 1764.1(a)(1) places the responsibility for obtaining the applicant's signature on both the nonadmitted insurer and the surplus line broker, and applies it at the time of accepting an application for a policy other than a renewal of that policy.", "Section 1764.1(a)(1) requires the surplus line broker to keep a copy of the signed disclosure in the broker's records for at least five years, and to make those records available to the commissioner and to the insured on request.", "Section 1764.1(a)(1) provides that the disclosure must be signed by the applicant and is not subject to a limited power of attorney agreement between the applicant and an agent, broker, or surplus line broker.", "Section 1764.1(a)(2) provides that where the applicant has not received and completed the signed disclosure form the section requires, the applicant may cancel the insurance so placed, that the cancellation shall be on a pro rata basis as to premium, and that the applicant is entitled to the return of any broker's fees charged for the placement.", "Section 1764.1(b) directs the reader of the notice to ask questions of their agent, broker or surplus line broker, or to contact the California Department of Insurance at 1-800-927-4357 or at www.insurance.ca.gov, and to ask whether the insurer is licensed as a foreign or non-United States insurer.", "Section 1764.1(b) requires the notice to be printed in English and in the language principally used by the surplus line broker and nonadmitted insurer to advertise, solicit, or negotiate the sale and purchase of surplus line insurance." ] }, { "id": "ca-ins-code-1765-1", "title": "California Insurance Code Section 1765.1 (when a nonadmitted insurer is eligible for a surplus line placement)", "publisher": "California Legislative Counsel (leginfo.legislature.ca.gov)", "url": "https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS§ionNum=1765.1", "sourceType": "statute", "jurisdiction": "CA", "authorityLevel": "primary-law", "primary": true, "publishedDate": "unknown", "effectiveDate": "unknown", "accessedDate": "2026-09-05", "lastChecked": "2026-09-05", "updateCadence": "Amended only by legislation.", "status": "active", "supportsClaims": [ "Section 1765.1 prohibits a surplus line broker from placing any coverage with a nonadmitted insurer for a home state insured unless, at the time of placement, the insurer meets the requirements of either subdivision (a) or subdivision (b), with a narrow exception for a Mexican-domiciled insurer covering only liability arising out of the ownership, maintenance or use of a motor vehicle, aircraft or boat in the Republic of Mexico.", "Section 1765.1(a)(1) requires an insurer domiciled in a state or territory of the United States to be licensed to write the type of insurance in its domiciliary jurisdiction.", "Section 1765.1(a)(2)(A) requires such an insurer to have capital and surplus that together total forty-five million dollars.", "Section 1765.1(a)(2)(B) permits an insurer with less than forty-five million dollars to satisfy the requirement upon an affirmative finding of acceptability by the commissioner, based on factors such as quality of management, capital and surplus of any parent company, underwriting profit and investment income trends, market availability, and company record and reputation within the industry, and prohibits the commissioner from making that finding where the foreign insurer's capital and surplus is less than four million five hundred thousand dollars.", "Section 1765.1(b) provides that an insurer not domiciled in a state or territory of the United States is eligible if it is listed on the Quarterly Listing of Alien Insurers maintained by the NAIC International Insurers Department and is licensed as an insurer in its domiciliary jurisdiction.", "Section 1765.1(c) permits the commissioner to issue an order without prior notice and hearing if at any time the commissioner determines that an insurer is no longer eligible under subdivision (a) or (b)." ] }, { "id": "ca-ins-code-1775-5", "title": "California Insurance Code Section 1775.5 (the surplus line premium tax)", "publisher": "California Legislative Counsel (leginfo.legislature.ca.gov)", "url": "https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS§ionNum=1775.5", "sourceType": "statute", "jurisdiction": "CA", "authorityLevel": "primary-law", "primary": true, "publishedDate": "unknown", "effectiveDate": "unknown", "accessedDate": "2026-09-05", "lastChecked": "2026-09-05", "updateCadence": "Amended only by legislation.", "status": "active", "supportsClaims": [ "Section 1775.5(a) requires every surplus line broker, annually on or before the first day of March, to pay the Insurance Commissioner for the use of the State of California a tax of 3 percent of the gross premiums charged less return premiums upon business done under the authority of the broker's licence during the preceding calendar year.", "Section 1775.5(a) excludes from that tax any portions of premiums upon business done involving the risk finance portion of a blended finite risk product used in the financing element of state or federal Superfund environmental settlements involving remediation of soil or groundwater contamination, and business excluded by Insurance Code section 1760.5.", "Section 1775.5(a) provides that where 3 percent of return premiums exceeds 3 percent of gross premiums in a calendar year, the broker may either carry the excess forward as a credit against the following year or elect to receive a refund equal to the taxes previously paid on that excess.", "Section 1775.5(b) provides that for the purpose of determining the tax, the total premium charged for all nonadmitted insurance placed in a single transaction with one underwriter or group of underwriters, whether in one or more policies, is the entire premium charged on all nonadmitted insurance for the California home state insured.", "Section 1775.5(c)(1) levies a penalty of 10 percent of the amount due upon a surplus line broker who fails to make the payment within the time required, plus interest at the rate of 1 percent per calendar month or fraction of a month from the March 1 due date until payment." ] } ] }