Which of the following is true regarding surplus lines insurance?

Surplus lines insurance is designed to provide coverage for risks that are not typically covered by standard or admitted insurance carriers. This type of insurance is particularly useful for higher-risk individuals or businesses that may not qualify for traditional insurance due to various reasons, such as unique operations or hazardous activities.

The correct choice indicates that surplus lines can only be sold to certain high-risk insureds, which aligns perfectly with its intended purpose. Surplus lines generally come into play when the usual market options are insufficient or unavailable, ensuring that those deemed higher risk can still receive insurance coverage, albeit typically at a higher premium.

In contrast, surplus lines insurance cannot be sold to just anyone or at any rate, as it is subject to specific regulations and typically must be placed with a licensed surplus lines broker who deals with non-admitted carriers. It also differs from insurance sold by admitted companies, which are insurers authorized to operate in the state and must adhere to stricter regulatory requirements. Thus, the limitations and specific audience of surplus lines insurance are what substantiate thetruth of the chosen statement regarding its applicability to high-risk insureds.