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Standard vs. Excess and Surplus Coverage

What’s the Difference?

We live by the lingo everyday, but what does it mean — really? Although agency or broker personnel deal with standard coverage on a regular basis, Excess and Surplus (E&S) may be a bit of a puzzle to many. What exactly is E&S and how can it affect your customers, not to mention your bottom line?

Standard insurance refers to traditional and financially conservative low risks that many insurance companies prefer. Standard insurance companies deal in normal risks and insurance products, such as business owner policies (BOPs), homeowners, auto, boats and motorcycles, and personal umbrellas.

E&S is anything but standard. Simply put, it’s coverage that’s “outside the box,” catering specifically to “hard-to-place” risks. E&S provides coverage when standard insurance carriers cannot or will no provide it. While estimated to be less than 7% of the market, the typical types of risks written in E&S lines include those that:

• Are high risk, such as explosive manufacturing, firearms makers, hazardous haulers
• Do not fit standard market underwriting, such as bars and taverns with dance floors, vacant properties, taxi cabs
• Require higher limits than offered by standard markets, such as $10,000,000 + liability umbrellas or $5,000,000+ property limits
• Specialty coverage, such as special events, concerts, hole-in-one contests, and unique situations
• Have excessive or otherwise unacceptable loss history

E&S plays a vital role in property and casualty because the E&S market fills a gap for agents and brokers, as it expands their capabilities by providing solutions for very hard-to-place risks. Without the E&S market, individuals and businesses would be forced to go uninsured, self-insure their risk exposure which means they would be on their own if an incident, claim or lawsuit occurs.

Prime Insurance Company is a preferred E&S lines insurance carrier for liability, professional, property and casualty insurance coverage. Prime does not compete with current markets, but provides coverage on all or part of the risk, allowing for more new business opportunities for agents and brokers. For more information on E&S lines or Prime Insurance, visit www.Primeis.com or call 877.257.5590.

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