Your broker went to a specialty insurance company because the standard companies said no. Specialty insurers, also called surplus lines insurers, exist to cover the trades, claims records, and limits that standard insurers turn down. Who this is for: owners who were told their quote is coming from a specialty market.
The short version
- Standard insurance companies pick and choose. Specialty insurers write what they turn down.
- Your broker cannot walk into one of these companies either. They go through a middleman, which is why the quote may carry two names.
- A specialty policy usually costs more, and adds a state tax and often a small filing fee.
- In nearly every state the fund that pays claims when an insurer fails does not cover a specialty policy, so the insurer's financial strength matters more.
- After two or three clean years, ask your broker to try the standard market again.
What is a specialty insurance company?
A specialty insurance company, also called a surplus lines insurer, is one your state allows to insure work the standard companies will not take. It is not licensed in your state the way a standard insurer is, and it does not have to use your state's approved rates or standard policy wording.
That freedom is the whole point. A standard insurer has to use approved rates and mostly standard forms, so if your trade does not fit the box it has to say no. A specialty insurer can price your work instead.
Why did the standard insurance companies turn my business down?
Almost never because of anything you did wrong. Each insurer keeps a list of what it wants to insure. If your business sits outside that list, the answer is no before anyone reads your application.
| What often puts you outside the standard market | Why the standard insurer says no |
|---|---|
| Roofing, demolition, or work high off the ground | Injury and property claims are large and frequent |
| A claim or two in the last three years | Approved rates leave no room to price around it |
| A brand new business | No claims history report to price from |
| A contract asking for very high limits | It will not put that much money behind a small crew |
How does my broker reach a specialty insurance company?
Through a middleman called a wholesaler. Your broker sends one application, the middleman shops it to the specialty companies it represents, and the quotes come back with both names on them. You never deal with it yourself, and if it charges a fee, that fee should be shown to you in writing before you buy. See the markets you cannot reach on your own.
How is a specialty policy different from a standard one?
| Question | Standard (admitted) insurer | Specialty (surplus lines) insurer |
|---|---|---|
| Who approves the price? | Your state reviews the rates | The insurer sets its own |
| What is the policy wording? | Mostly standard industry forms | Often the insurer's own wording, so read it |
| Licensed in your state? | Yes | No. It is licensed where it is based and approved by your state for this business |
| If the insurer fails? | A state fund pays covered claims up to a state cap | In nearly every state that fund does not apply. New Jersey runs one of its own |
| Extra taxes and fees? | None on your invoice | A state tax, commonly 3 to 6 percent of premium, and in about a third of states a filing fee |
| Who can apply? | Brokers the insurer has signed up | Brokers, through a middleman |
Illustrative only: on a $12,000 general liability premium, a 3 to 6 percent state tax is roughly $360 to $720, plus a filing fee if your state charges one. Ask your broker for the exact figures on your quote. Background: admitted versus non-admitted insurers.
Will my contract accept a specialty policy?
Most contracts run two tests, not one. First, a financial strength rating from A.M. Best, usually A- VII or better, which plenty of specialty insurers pass. Second, on public work, that the insurer be licensed in the state, which a specialty insurer is not. That second test blocks a specialty policy more often than anything else.
If your contract has that second line, tell your broker before you buy. They can ask the customer to accept the specialty insurer, or keep looking for a standard one that will write the work. See how to ask a customer to change a requirement.
How do I get back to a standard insurance company?
- Run two or three clean years. Most standard insurers start looking again after that.
- Keep your claims history report handy. Ask your insurer for a copy every year.
- Write down your safety rules. A one page plan and training records help.
- Test the standard market at every renewal. What insurers want changes every year.
What this looks like in real life
Illustrative example. It is typical of what we see and is not a promise of how any specific situation would be handled.
The setup: A roofing contractor in Texas with six employees and about $900,000 in yearly sales loses his policy when his insurer stops writing roofers. He applies to four companies online and all four say no.
What went wrong: He has a $250,000 reroofing job starting in a month and no proof of insurance. Every company he can reach on his own writes roofing only for crews that stay on the ground.
What it cost: Illustrative numbers: his broker sends one application to two standard insurers and one middleman. Both standard insurers say no in writing. The specialty quote comes back at $18,400 for general liability, plus about $1,000 in state tax and filing fee. His old premium was $12,600.
The fix: The extra $6,800 bought the only policy on the market that covers his actual work. Two clean years later his broker moved him back to a standard insurer.
Frequently asked questions
Q: Why does my broker need a specialty insurance company for my business?
Because the standard insurers declined your business, or would not write it at the limits your contract needs. Specialty insurers exist to cover exactly that work, and they only take applications through brokers.
Q: Is a specialty insurance company a real insurance company?
Yes, it is a real insurance company, licensed where it is based and approved by your state to write what standard insurers turn down. It is not licensed in your state the way a standard insurer is, which is why it does not file rates there and why the state guaranty fund does not apply. Ask for its financial strength rating before you buy.
Q: My quote has two company names on it. Why?
Because your broker went through a middleman to reach a specialty insurer. You never deal with that company yourself. If it charges a fee, that fee should be shown to you in writing first.
Q: Will my general contractor accept a policy from a specialty insurer?
It depends on two tests. Most contracts want a financial strength rating of A- VII or better, which many specialty insurers pass. On public work they usually also want an insurer licensed in the state, which a specialty insurer is not, and that is what most often blocks one.
Q: What happens if my insurance company goes out of business?
With a standard insurer, the state guaranty fund pays covered claims up to a state cap, and larger businesses can be left out. With a specialty insurer, in nearly every state that fund does not apply, though New Jersey runs one of its own. The insurer's financial strength rating matters more here.
Q: Can I go back to a standard insurance company later?
Often yes. Two or three years without claims will get you looked at again, and what insurers want changes every year. Ask your broker to test the standard market at renewal.
How Morrow helps
Morrow is a licensed independent commercial insurance brokerage that works with contractors and trades every day. Finding the specialty market that will write a trade the standard companies keep declining is a large part of what we do for contractors.
- Free contract review. Send us the contract or bid documents and we mark up the insurance section in plain English, whether or not you buy anything from us.
- Free, instant certificates. Clients issue their own certificates of insurance online in about a minute, any hour, any day, at no charge.
- Markets you cannot reach online. One application, shopped across many insurance companies for general liability, workers comp, auto, umbrella, and pollution coverage.
One more thing. This article is general information and is not legal advice or a statement of coverage. Your contract and your policy wording control in every case. Requirements vary by customer, by state, and by insurance company, so have a licensed advisor review your own contract and your own policy before relying on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated September 2026.