Admitted vs. Surplus Lines Boat Insurance

Have you heard of the Admitted or Surplus lines market before?

After 13 years of working exclusively with boats and yachts, I’ve come across my fair share of confusion about the types of admitted and surplus lines boat insurance options that are available. Just last week, a longtime client came to me with a quote from another agent, that he wanted to understand more. At first glance, it looked like a great deal. But once I dug into the details, I saw this was a surplus lines carrier, even though he qualified for admitted insurance. After explaining the differences, he ultimately decided to stick with his admitted policy, and here’s why.

What Is Admitted Boat Insurance?

Admitted insurance carriers are licensed by the state, meaning they must meet strict regulatory standards. These include following state guidelines on coverage, pricing, and how claims are handled. One of the biggest advantages is that admitted carriers are backed by state guaranty funds. This means that if the insurance company goes under, the state will step in to help pay claims. For boat and yacht owners, this level of protection is critical—you’ve invested a lot in your boat, and you want to make sure you’re fully covered if something goes wrong.

What Is Surplus Lines Boat Insurance?

Surplus lines insurance operates a little differently from admitted coverage. While surplus lines carriers offer more flexibility to cover higher-risk boats or unique situations that admitted carriers won’t insure, there are some important things to keep in mind.

First, surplus lines policies often come with additional taxes and fees that you won’t find with admitted coverage. These costs are passed on to the policyholder, making surplus lines more expensive overall. Plus, surplus lines carriers aren’t subject to the same state regulations, meaning they can set their own terms—often resulting in more restrictive rules or limited coverage.

You might need surplus lines coverage if you have a boat that’s considered too high-risk for the admitted market. For example, if you own a performance boat capable of speeds over 100 mph, an ultra-high-value yacht worth several million dollars, or if you’re keeping your boat in a hurricane-prone area like parts of Florida, admitted carriers may not want to take on that risk. In those cases, surplus lines may be your only option.

Another key point is that insurance agencies need a surplus lines license to offer these policies. Surplus lines coverage is only available when no admitted carrier will take on the risk. In fact, agencies generally aren’t allowed to offer surplus lines insurance if the customer qualifies for an admitted policy. So, if you’re ever offered surplus lines, it’s important to double-check whether you’re eligible for admitted coverage first—it could save you money and provide better protection. Each state has a governing body that keeps information on the surplus insurance market, for example in Florida, the FLSLO maintains all surplus information for the state.

The Role of Insurance Agencies

One key detail to keep in mind—insurance agencies generally aren’t allowed to offer you surplus lines coverage if you qualify for admitted insurance. Surplus lines is supposed to be the option when no admitted carrier is willing to insure you. So, if you’re being presented with a surplus lines policy, make sure to ask whether you qualify for admitted coverage first. It’s a crucial step that could save you a lot of headaches down the road.

Your Insurance Carrier Matters!

This brings me back to my client’s situation. He qualified for an admitted policy, but he was given a surplus lines option instead. After reviewing the quote, I pointed out that while surplus lines coverage might have looked attractive at first, it came with more restrictive terms. Most importantly, he would have been sacrificing the protections that come with an admitted carrier.

I advised him, “If you qualify for admitted coverage, there’s no reason to roll the dice on surplus lines.” Thankfully, after understanding the differences, he chose to stay with his admitted policy, where he’s better protected and has fewer restrictions.

The Bottom Line

Surplus lines insurance is a valuable part of the industry, but it’s not meant for everyone. If you qualify for admitted coverage, that’s always the better choice. You’re getting more comprehensive protection, backed by state oversight, and typically, a better price. Surplus lines should only be considered when the admitted market won’t take your risk.

If you’ve been offered a surplus lines policy or aren’t sure what type of coverage you qualify for, feel free to reach out. I’m more than happy to review your options and make sure you’re covered in the way that’s best for your specific situation.

As always, remember to wear your life jacket and enjoy the water!