By the QuizzPrep Team | June 15, 2024 | Last Updated: June 15, 2024 | 12-minute read
Gain the specialized knowledge required to become a licensed surplus lines insurance broker. Our comprehensive preparation resources are designed to help you understand complex non-admitted market regulations and pass your state's specific licensure examination with confidence.
Utilize our free resources to build your foundational knowledge and target key exam topics.
Surplus Lines Flashcards: Master key terminology, regulations, and policy types with hundreds of interactive digital flashcards. Start reviewing essential terms today. Start the Free Flashcards →
Surplus Lines Study Guide: Dive deep into the core concepts, including diligent search requirements, premium tax calculations, and unauthorized insurer regulations. This comprehensive guide covers the entire exam outline. Access the Free Study Guide →
Surplus Lines Cheat Sheet: Quickly review critical facts, formulas, and deadlines with our concise, high-yield cheat sheet. Perfect for last-minute review sessions. Download the Free Cheat Sheet →
Here are the general parameters for the Surplus Lines Exam. Please note that specific details, including fees and scoring, are determined by your individual state's Department of Insurance and testing vendor (e.g., Pearson VUE, PSI).
⏱️ Exam duration: Typically 2 to 3 hours, depending on the state.
???? Total/scored questions: Ranges from 50 to 100 multiple-choice questions.
✅ Passing score: Usually requires a score of 70% or higher to pass.
???? Current exam fee: Varies by state, generally between $40 and $100.
The Surplus Lines Exam is a specialized professional licensure test for individuals seeking to become licensed surplus lines brokers or agents. This exam evaluates your understanding of the laws, regulations, and practices governing the placement of insurance with non-admitted (surplus lines) carriers. Unlike standard property and casualty exams, this assessment focuses heavily on the unique regulatory framework, the requirement to conduct a diligent search for admitted coverage, and the specific tax and reporting obligations associated with surplus lines placements. Passing this exam demonstrates your competence to navigate this complex sector of the insurance industry, allowing you to legally assist clients with risks that standard insurers are unwilling or unable to cover. Effective preparation is crucial due to the specific state-by-state variations in surplus lines law.
Work through these targeted practice modules, each aligned with common state exam outlines, to build your proficiency in every subject area.
Master the legal framework governing surplus lines insurance, including broker licensing requirements, responsibilities, and the definition of a surplus lines licensee in your state. Start Free Test →
Understand the role and function of non-admitted insurers, the distinction between admitted and non-admitted carriers, and the purpose of the surplus lines market in the broader insurance landscape. Start Free Test →
Learn the specific procedures and documentation required to demonstrate that a diligent effort was made to place coverage with admitted carriers before seeking surplus lines placement. Start Free Test →
Explore the process of placing business with surplus lines insurers, including eligibility criteria for the insurer, required policy disclosures, and the role of surplus lines brokers. Start Free Test →
Understand your obligations regarding the collection, reporting, and payment of surplus lines premium taxes and stamping fees, including timelines and filing procedures. Start Free Test →
Learn how to determine if a non-admitted insurer is eligible or on an approved list to write surplus lines business in your state, and the implications of using non-eligible carriers. Start Free Test →
Understand the special rules and exemptions that apply when placing surplus lines insurance for sophisticated commercial entities that meet specific criteria. Start Free Test →
Review the ethical and professional duties of a surplus lines broker, including record-keeping, notification requirements, and prohibitions against certain practices. Start Free Test →
Familiarize yourself with common surplus lines policy forms, the use of manuscript endorsements, and how surplus lines policies differ from standard admitted market forms. Start Free Test →
Learn the requirements for providing evidence of insurance to the insured and the specific disclosure statements that must be included on surplus lines policies and binders. Start Free Test →
Understand the regulations concerning the cancellation and non-renewal of surplus lines policies, as well as the rules related to premium financing in the surplus lines market. Start Free Test →
Demonstrate your commitment to ethical practice by understanding the NAIC Producer Licensing Model Act and state-specific regulations governing professional conduct in the surplus lines industry. Start Free Test →
Review these original Q&A pairs to test your recall and understanding of key exam topics.
Question 1: A surplus lines broker has made a diligent search for a specific commercial property risk and has determined that the full amount of insurance required is not available from authorized (admitted) insurers. The broker subsequently places the entire risk with an eligible non-admitted insurer. Is this placement permissible under most state surplus lines laws?
Answer and Explanation: Yes, this placement is generally permissible. Surplus lines laws allow the placement of insurance with non-admitted carriers only if the full amount or type of insurance cannot be procured from admitted insurers after a diligent search. The broker must document this search. Start the Free Practice Test →
Question 2: A surplus lines broker in State X places a policy with a non-admitted insurer. The premium for the policy is $5,000, and the state surplus lines premium tax is 3%. What is the amount of surplus lines tax the broker must collect from the insured and remit to the state?
Answer and Explanation: The broker must collect and remit $150 ($5,000 x 0.03). Surplus lines premium taxes are calculated based on the full policy premium and are typically paid by the insured, collected by the broker, and remitted to the state or a designated stamping office. Access the Free Study Guide →
Question 3: Under the Nonadmitted and Reinsurance Reform Act (NRRA), which state has the authority to require a premium tax payment for a multi-state risk, assuming the broker is properly licensed in the insured's home state?
Answer and Explanation: Under the NRRA, only the insured's home state may require the payment of premium tax for a non-admitted insurance policy, even if the risk covers multiple states. The tax is allocated according to the laws of the home state. Start the Free Practice Test →
Question 4: Before binding coverage with a non-admitted insurer, what disclosure must a surplus lines broker provide to the insured in most states?
Answer and Explanation: The broker must typically provide a clear disclosure statement, often required to be signed by the insured, stating that the insurance is being placed with a non-admitted insurer that is not regulated by the state insurance
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