Arizona Surplus Lines key terms

Coverage placed with an eligible non-admitted insurer when admitted carriers licensed in the state decline or cannot provide the needed coverage, arranged through a specially licensed broker under state rules.

An insurance company that is not licensed by the Arizona Department of Insurance and Financial Institutions to transact business in the state, but may write surplus lines if it meets eligibility standards.

A non-admitted insurer that satisfies statutory financial, trust fund, and reporting requirements, allowing a surplus lines broker to lawfully place Arizona risk with it.

A person holding a special Arizona license authorizing the placement of insurance with eligible non-admitted insurers, including collecting premium, paying tax, and filing required reports.

The documented effort to obtain coverage from admitted insurers before placing a risk with a non-admitted carrier, typically recorded as declinations from authorized insurers.

A written or recorded refusal by an admitted insurer to accept all or part of a risk, which supports the diligent search documentation required for surplus lines placement.

A list of coverages that Arizona rules exempt from the full diligent search requirement, allowing surplus lines brokers to place them directly with eligible non-admitted insurers.

A tax imposed on surplus lines premiums written in Arizona, collected by the surplus lines broker and remitted to the state on the schedule set by law.

A periodic filing a surplus lines broker submits to state regulators itemizing policies placed, premiums written, and taxes collected during the reporting period.

A license issued by the Arizona Department of Insurance and Financial Institutions permitting an insurer to transact specified lines of insurance business within the state.

An insurer holding a certificate of authority from Arizona regulators, subject to state solvency oversight, rate regulation, and guaranty fund protection.

The Arizona agency, commonly called DIFI, that licenses insurers, producers, and brokers, enforces insurance statutes, and regulates market conduct within the state.

Authorization granted by Arizona regulators allowing a person to solicit, negotiate, or sell insurance, subject to prelicensing education, examination, and continuing education requirements.

Ongoing coursework Arizona licensees must complete during each renewal cycle to maintain an active producer or broker license and stay current on statutes and practices.

The periodic process by which a licensee submits fees and required documentation to keep an Arizona insurance license active, typically every two years.

A formal notice from an insurer authorizing a producer to act on its behalf, which must be filed with Arizona regulators before the producer may transact business for that insurer.

The end of an insurer's authorization for a producer, which the insurer must report to Arizona regulators, sometimes with a statement of cause.

The legal obligation of a producer or broker to hold premiums and client funds in trust, account for them accurately, and act in the client's best interest.

Documentation showing payment of premium to a broker or insurer, which establishes the coverage effective date and supports tax and accounting records.

Temporary written evidence of insurance coverage issued before the policy is finalized, binding the insurer to provide protection from a stated effective date.

The page of an insurance policy that identifies the insured, covered property or exposures, policy period, limits, deductibles, and premium charged.

The maximum amount an insurer will pay for a covered loss under a policy, stated per occurrence, per claim, or in the aggregate.

The amount of a covered loss the insured must absorb before the insurer begins paying, which reduces premium in exchange for shared risk.

A specified amount the insured pays toward a loss before any applicable insurance responds, often used with excess or surplus lines liability programs.

Coverage for risks that standard admitted markets cannot insure, including unusual exposures, high limits, or distressed properties, placed with specialized non-admitted carriers.

A liability insurance company owned by its insured members, formed under federal law and chartered in one state, which may operate nationwide without full admitted status.

An insurance company formed by a business or group to insure its own risks, often licensed in a domicile state and subject to limited regulatory oversight.

A cost-sharing or property valuation provision requiring the insured to carry a minimum percentage of value or pay a reduced claim amount.

The principle that insurance restores the insured to approximately the financial position held before a loss, without providing profit from the loss.

A financial stake in the person or property insured such that the insured benefits from its continued existence and suffers loss from its damage.

The principle requiring both insurer and applicant to disclose material facts honestly, because the insurer relies on the applicant's information to underwrite risk.

A false or misleading statement of a fact that would influence an insurer's decision to issue coverage or set its terms, potentially voiding the policy.

The increased likelihood of loss arising from an insured's attitude or behavior, such as carelessness or dishonesty, which underwriters evaluate when pricing risk.

The process of evaluating a risk's characteristics, exposures, and loss history to decide whether to insure it and what premium and terms to apply.

The amount charged by an insurer for providing coverage during a policy period, calculated from exposure, rate, and underwriting factors.

A valuation method paying replacement cost minus depreciation, reflecting the property's value at the time of loss rather than the cost of new replacement.

A valuation method paying the amount needed to repair or replace damaged property with new property of similar kind and quality, without deducting depreciation.

A state mechanism that pays certain claims of insolvent admitted insurers, generally excluding obligations of non-admitted surplus lines carriers.

A regulatory review of an insurer's or broker's business practices, including sales, underwriting, claims, and recordkeeping, to verify compliance with Arizona law.