Excess and surplus lines (E&S) insurance is a market that protects high-risk businesses that standard insurers won’t cover. This market is also known as surplus lines or non-admitted insurance.
Companies with unusual or elevated risks often need E&S insurance because the admitted market considers them too risky to cover. These businesses could get a policy through a qualified E&S carrier.
How does E&S insurance help small businesses?
E&S insurance helps small businesses get the right coverage for their specific risks. If you have an unusual or high-risk business, you might need insurance from a company outside of the admitted market.
Surplus lines insurers have more flexibility with the risks they choose to cover and the premiums they set for that coverage. This freedom allows carriers to adapt to business trends faster than standard insurers and create customized coverages for their clients.
E&S insurance through the Progressive Advantage® Business Program offers the same types of service as standard business insurance, such as the ability to speak with an agent, file claims with the insurer and more.
Admitted vs Non-admitted Insurance
There are two markets in insurance: admitted and non-admitted.
- Admitted insurance is standard insurance. The state backs these carriers, which must follow certain regulations. If the admitted insurance company becomes bankrupt, the state will pay necessary claims.
- Non-admitted insurance is E&S insurance. These specialty carriers can take on greater insurance risks. They have this ability because they are not limited by the same state regulations as admitted companies.
Both types of insurance are valid, and each one helps a different kind of consumer.
Who needs E&S insurance?
There are several reasons why small businesses might need E&S insurance, including business tenure and profession.
Admitted carriers often view businesses with less than three years’ experience as high-risk. Surplus lines insurance is usually the only coverage option for these businesses.
For example, a new flower shop might be considered a high-risk business and require insurance from the E&S market. Once this shop reaches a certain business tenure, it could qualify for the standard market.
More commonly, businesses in high-risk industries need E&S insurance. These include:
For example, tree service is an unusually risky field. Employees use hazardous equipment, like chainsaws and cranes, to cut down trees. They might also work near powerlines and busy roads. As a result, most standard carriers avoid insuring these businesses. E&S insurance companies can fill this gap.
If you need help determining what type of general liability policy is right for your business, our agents can help. Call us today.
E&S insurance cost
Surplus lines insurance typically costs more than standard business insurance because of the heightened risks and exposures that E&S companies take on. Claims involving high-risk professions are typically more expensive, and E&S carriers are better suited to support these types of claims.
Your rate depends on specific features of your business, including your coverage needs and claims history. The best way to find out what you’ll pay is to get a quote.
Choosing an E&S insurance company
If you need excess and surplus lines insurance, you’ll want to choose a company that is financially strong. You should have confidence in your carrier’s ability to pay your claim if an accident occurs.
Progressive works with highly rated insurers to provide you with stability, options and expertise. We can help you find general liability coverage in both standard and E&S markets at any stage in your business’s development. You can start a quote online or call us to speak with an agent.