How many insurers have to decline before a broker can place my risk in the non-admitted market?

What this assumes

• The placement is for a home state insured in California and goes to a nonadmitted insurer through a licensed surplus line broker, which is what the chapter requires of a nonadmitted placement in the first place [2].

• The class is not one of those excluded from the chapter's placement limits, such as reinsurance of an admitted insurer's liability, ocean marine, aircraft or spacecraft, or interstate railroad property and operations [2].

• You are asking what the broker must do before placing, rather than what the policy costs or covers.

What changes the answer

• Whether you meet the commercial insured definition, which turns the requirement off on the two written conditions above [1]. The broker is responsible to ensure the applicant is a commercial insured, though a broker who reasonably relies on information provided in good faith by the applicant is deemed in compliance [1].

• Whether admitted carriers write your type of insurance at all. Where fewer than three do, that fact rather than three declinations satisfies the evidentiary test [1].

• Whether the placement is a mid-term extension of an existing surplus lines policy. The section does not apply to an extension by the same insurer of the same risks for the same insured, provided it does not exceed 90 days in the aggregate in any 12-month period, includes no change in coverage, terms, conditions or limits, and prices any additional premium pro rata at the existing rate [1].

• Whether price is the reason for the placement. Insurance may not be placed with a nonadmitted insurer to procure a rate lower than the lowest an admitted insurer will accept, and placement at a lower rate than the lowest obtainable from an admitted insurer is conclusively presumed to violate the section unless a statement explaining it is filed with the commissioner when the insurance attaches [1].

Where it varies by state, form, carrier, or fact

• This is California. Diligent effort rules, declination counts, export lists and commercial exemptions differ by state, and a broker placing a multi-state programme works to the home state's rules.

• The three-declination showing is prima facie evidence, which means it establishes the point unless rebutted. It is not a safe harbour, and subdivision (b) expressly contemplates the commissioner going behind the form [1].

• The report and the diligent effort form are confidential filings. Statements filed under the section are not subject to public inspection unless the commissioner determines the public interest or the welfare of the filing broker requires it [1], so you will not find another buyer's file to compare against.

• Mexican placements are treated separately. The section does not apply to insurance issued to a home state insured by a nonadmitted Mexican insurer through a surplus line broker covering exclusively property located or operations conducted within the Republic of Mexico [1].

Next actions

1. Ask your broker for the diligent effort form for your placement and read which insurers were approached and what each said.

2. Check that the carriers listed actually write your type of insurance in California, since that is the test the form has to meet [1].

3. If you were told the search does not apply because you are a commercial insured, ask for the written disclosure you were given and the written request you made, in that order [1].

4. Ask whether the report of the placement was filed with the commissioner within 60 days, which the statute requires along with a copy of the declarations page, certificate or binder [1].

Source ledger

2 sources. Every citation number above resolves to a record below. Nothing here sits behind an account.

1. [1]

   California Insurance Code Section 1763 (diligent search before placing surplus line insurance)(opens the original record on California Legislative Counsel (leginfo.legislature.ca.gov))

   California Legislative Counsel (leginfo.legislature.ca.gov)Primary lawPrimaryJurisdiction CALast checked September 5, 2026Updates: Amended only by legislation.ID ca-ins-code-1763

   What this source supports (15)

   • 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.

   The three-declination test in subdivision (b) is prima facie evidence rather than a definition of diligent search, and subdivision (b) lets the commissioner go behind the form to check whether the insurers named actually write the type at all. The commercial-insured exemption in (h) is the part most often stated without its two conditions, both of which must be in writing.

   Active
2. [2]

   California Insurance Code Sections 1760.5 and 1761 (what falls outside the surplus line chapter, and who may place the rest)(opens the original record on California Legislative Counsel (leginfo.legislature.ca.gov))

   California Legislative Counsel (leginfo.legislature.ca.gov)Primary lawPrimaryJurisdiction CALast checked September 5, 2026Updates: Amended only by legislation.ID ca-ins-code-1760-5

   What this source supports (5)

   • 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.

   Read together these two sections draw the boundary of the surplus line regime: 1761 says a nonadmitted placement must go through a licensed surplus line broker, and 1760.5 lists the classes that sit outside the chapter's placement limits entirely, three of which still require a special lines' surplus line broker. Ocean marine is the commercially significant one and it is routinely described as surplus lines when the statute treats it separately.

   Active

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