What is the first step in placing surplus lines insurance in Pennsylvania?

The first step in placing surplus lines insurance in Pennsylvania is ensuring that coverage is not available from licensed insurers. This step is essential because surplus lines insurance is designed for situations where traditional insurance markets cannot or will not provide the necessary coverage.

Before engaging a non-admitted insurer, a broker or agent must conduct diligent searches of the licensed market to confirm that the required coverage cannot be sourced from those insurers. Only after this determination can surplus lines insurance be considered appropriate for the risk at hand. This process is crucial not just for compliance with regulatory requirements, but also to protect consumers by ensuring they have thoroughly explored all available options before resorting to surplus lines.

The other options involve steps that occur later in the process or are not prerequisites for placing surplus lines insurance. Acquiring a surplus lines license, for instance, is indeed necessary but only once it is established that surplus lines are required. Filing a claim and choosing specific policy terms are actions that would take place after the placement of coverage has been initiated.