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Excess & Surplus (E&S) Lines Insurance
any type of coverage that cannot be placed with an admitted insurer in a certain jurisdiction.
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Effects of the Excess & Surplus Market
- The E&S market is characterized by limited regulation, which has two effects
- Insurers can set premiums for coverage as they see fit.
- They can offer policy forms on a nonstandardized and often case-by-case basis.
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Surplus Lines Broker
a broker who is licensed to place coverage with nonadmitted insurers.
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Managing General Agents (MGA)
a wholesale insurance intermediary with the authority to accept placements from retail agents on behalf of an insurer. MGAs generally provide underwriting and administrative services.
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Affidavits
For a risk to be placed with a nonadmitted insurer, it must be rejected by at least threeadmitted insurers. Wholesale brokers must maintain the documentation showing that a diligent search was performed in trying to place the business in the admitted market.
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Exportable List
An exportable list is a list of risks that are inherently so hard to place that the state regulator has waived the diligent search requirement for those risks.
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Earthquake Insurance
Earthquake deductibles for direct property damage are usually expressed as a percentage of the structural value. The deductible usually ranges from 5 to 10 percent of the insured value. Especially important is whether the deductible applies per structure or per location, because a location can have multiple structures. An earthquake may include aftershocks occurring within a certain time period, such as 72 hours.
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Crop-Hail Insurance
protects against loss of crops arising from natural disasters, such as drought and hail.
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Private Crop-Hail vs. Government Crop-Hail
- Private: first dollar coverage; no subsidy; flexible deadline; coverage based on acre.
- Government: built-in deductible; subsidy; stricter deadline; based on yield.
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Windstorm Insurance
- 8 States: Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Texas.
- Insurers in all eight states are required to have plan.
- Mobile homes are ineligible.
- Usually large deductibles.
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