Diligent search (surplus lines)
Before a California broker places a risk with a surplus lines (non-admitted) insurer, they must make a documented effort to place it in the admitted market first. This is the diligent search, and it is governed by California Insurance Code section 1763 and related regulations.
In practice it means recording each admitted carrier approached, when, how, and the reason given for the declination. The record is the broker's own, kept to show the search happened.
The number of declinations required, and whether an export-list exemption applies to a particular class of business, are set by regulation and change. Confirm the current requirement with the Surplus Line Association of California rather than relying on any software's summary of it, including this one.
Why it matters to a homeowner: a surplus lines policy is not backed by the California Insurance Guarantee Association, so if that insurer fails there is no state guarantee fund behind the policy. That is a real difference from an admitted policy, and worth understanding before signing.
Related terms
- California FAIR Plan — The state-mandated insurer of last resort for property that cannot get coverage elsewhere.
- Admitted and non-admitted carriers — Whether an insurer is licensed by California, and what that means if it fails.