What type of business can purchase insurance directly from surplus lines carriers?

The correct answer is that an industrial insured meeting specific criteria can purchase insurance directly from surplus lines carriers. This is rooted in the purpose of surplus lines insurance, which is designed to cover risks that standard insurers are unwilling or unable to underwrite. An industrial insured refers to a large commercial entity that often has unique needs and significant insurance requirements, typically exceeding what the standard market can provide.

To qualify as an industrial insured, the business usually must also meet certain financial criteria, such as having a minimum amount of total insurance coverage or generating a specified level of revenue. This ensures that the businesses accessing surplus lines are capable of handling the increased risks associated with this type of insurance.

In contrast, while a business of any size may theoretically be able to seek surplus lines coverage, only specific types of businesses like the industrial insured typically navigate this route based on their unique needs and regulatory framework. Startups and franchises, in many cases, may not fit the stringent criteria necessary to directly purchase from surplus lines carriers, as they may not yet have the risk profile or financial stability required by these insurers.