What Happened?

If you can't get home insurance from a regular state-licensed company, you may be landing in a less-protected market that grew 20.2 percent in just the first half of this year. A Congressional Research Service (CRS) report examined this shift, according to a Legis1 review of the findings published Nov. 5. ​

Surplus lines insurance is coverage sold by insurers that do not hold a license in the state where they sell, stepping in when standard state-licensed, or "admitted," insurers won't write a policy. The CRS report calls these insurers a "safety valve" for homeowners who can't get coverage elsewhere, but warns their policies "may offer fewer consumer protections or less coverage."

Surplus lines homeowners premiums reached approximately $4.15 billion in 2025, when this alternative market accounted for 2.2 percent of all homeowners insurance written nationwide.

Why Does it Matter to Me?

Admitted insurers participate in state insurance guaranty funds, which can protect policyholders when an insurer becomes insolvent, but surplus lines insurers do not.

Surplus lines insurers are also not subject to a state's rules on what a policy must cover or what it can charge, because they operate without a state license where they sell.

The principal federal framework here is the Nonadmitted and Reinsurance Reform Act of 2010, enacted as Title V, Subtitle B of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which harmonizes aspects of surplus lines regulation and taxation across states.

Both Sides, Now

The report describes surplus lines insurers as a "safety valve" for consumers who cannot obtain coverage from state-licensed insurers, but it cautions that such policies "may offer fewer consumer protections or less coverage." Surplus lines insurers do remain subject to financial reporting, solvency oversight by their home-state regulators, and antifraud laws, and brokers must document that they tried standard insurers first, typically with three to five rejections, before placing a policy in this market.

What Happens Next?

The surplus lines share of the homeowners insurance market more than doubled over the past decade, rising from 0.8% in 2015 to 2.2% in 2025.

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