Texas Surplus Lines Insurance Agent Licensing Exam
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Answers) Plus Rationales 2025/2026 Q&A | Instant
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1. Which type of insurance is typically placed through a surplus lines agent?
Excess or non-admitted insurance
Surplus lines agents deal with risks that admitted carriers are unwilling or
unable to insure.
2. Surplus lines insurers in Texas must be:
Non-admitted insurers approved by the Texas Department of Insurance
They are not licensed in Texas but are approved to write surplus lines
coverage.
3. What is the primary role of a surplus lines broker?
To place coverage with non-admitted insurers
They act as intermediaries for risks that cannot be placed with admitted
insurers.
4. Before placing a risk with a surplus lines insurer, an agent must:
Conduct a diligent search among admitted insurers
Texas law requires proof that coverage is unavailable from admitted
carriers.
5. Which of the following is a reason a surplus lines policy may be used?
Unique or high-risk exposures
Standard insurers often decline unusual or high-risk exposures.
,6. Who regulates surplus lines insurance in Texas?
Texas Department of Insurance (TDI)
TDI oversees both admitted and surplus lines insurance practices.
7. Which form of license is required to sell surplus lines insurance in Texas?
Surplus lines agent license
This license authorizes the sale of non-admitted insurance products.
8. Surplus lines insurers are exempt from:
Some state rate and form regulations
Non-admitted insurers are not bound by Texas rate and form filing
requirements.
9. How often must surplus lines agents file a report of premiums with TDI?
Annually
Texas law requires annual reporting of all surplus lines placements.
10.Which document proves a diligent effort to place coverage with admitted
insurers?
Affidavit of diligent effort
This affidavit documents attempts to obtain coverage from admitted
carriers.
11.Surplus lines premiums are subject to which tax in Texas?
Surplus lines tax
A specific tax is levied on premiums placed with non-admitted insurers.
12.What is the maximum surplus lines tax rate in Texas?
4.85%
This rate applies to gross premiums for surplus lines policies.
13.Can a surplus lines agent place insurance with any non-admitted insurer?
No, only with eligible non-admitted insurers approved by TDI
Approval ensures the insurer meets minimum financial and regulatory
standards.
, 14.What is a common reason an insurance risk might not be accepted by
admitted insurers?
Unusual or catastrophic exposures
High-risk or unusual risks often require the flexibility of surplus lines
markets.
15.Are surplus lines policies covered by the Texas Guaranty Fund?
No
The Texas Guaranty Fund only protects policyholders of admitted insurers.
16.What is the term for the insurer that is not licensed but provides surplus
lines coverage?
Non-admitted insurer
This distinguishes them from admitted carriers licensed in Texas.
17.How must surplus lines agents maintain records of surplus lines
placements?
For at least 3 years
TDI requires records to be maintained for auditing purposes.
18.Can a surplus lines agent advertise non-admitted insurers?
Yes, if disclosures about non-admitted status are made
Consumers must know the insurance is not covered by standard regulatory
protections.
19.What is the purpose of a surplus lines placement notice?
To inform the insured the policy is with a non-admitted insurer
Disclosure ensures transparency and consumer protection.
20.Surplus lines insurance is generally used for which type of business?
Businesses with unique, high-risk, or large exposures
These risks cannot easily be placed with admitted carriers.
21.Who pays the surplus lines tax?
The surplus lines agent collects it from the insured and remits to TDI
The agent acts as a collector on behalf of the state.
– Practice Questions And Correct Answers (Verified
Answers) Plus Rationales 2025/2026 Q&A | Instant
Download Pdf
1. Which type of insurance is typically placed through a surplus lines agent?
Excess or non-admitted insurance
Surplus lines agents deal with risks that admitted carriers are unwilling or
unable to insure.
2. Surplus lines insurers in Texas must be:
Non-admitted insurers approved by the Texas Department of Insurance
They are not licensed in Texas but are approved to write surplus lines
coverage.
3. What is the primary role of a surplus lines broker?
To place coverage with non-admitted insurers
They act as intermediaries for risks that cannot be placed with admitted
insurers.
4. Before placing a risk with a surplus lines insurer, an agent must:
Conduct a diligent search among admitted insurers
Texas law requires proof that coverage is unavailable from admitted
carriers.
5. Which of the following is a reason a surplus lines policy may be used?
Unique or high-risk exposures
Standard insurers often decline unusual or high-risk exposures.
,6. Who regulates surplus lines insurance in Texas?
Texas Department of Insurance (TDI)
TDI oversees both admitted and surplus lines insurance practices.
7. Which form of license is required to sell surplus lines insurance in Texas?
Surplus lines agent license
This license authorizes the sale of non-admitted insurance products.
8. Surplus lines insurers are exempt from:
Some state rate and form regulations
Non-admitted insurers are not bound by Texas rate and form filing
requirements.
9. How often must surplus lines agents file a report of premiums with TDI?
Annually
Texas law requires annual reporting of all surplus lines placements.
10.Which document proves a diligent effort to place coverage with admitted
insurers?
Affidavit of diligent effort
This affidavit documents attempts to obtain coverage from admitted
carriers.
11.Surplus lines premiums are subject to which tax in Texas?
Surplus lines tax
A specific tax is levied on premiums placed with non-admitted insurers.
12.What is the maximum surplus lines tax rate in Texas?
4.85%
This rate applies to gross premiums for surplus lines policies.
13.Can a surplus lines agent place insurance with any non-admitted insurer?
No, only with eligible non-admitted insurers approved by TDI
Approval ensures the insurer meets minimum financial and regulatory
standards.
, 14.What is a common reason an insurance risk might not be accepted by
admitted insurers?
Unusual or catastrophic exposures
High-risk or unusual risks often require the flexibility of surplus lines
markets.
15.Are surplus lines policies covered by the Texas Guaranty Fund?
No
The Texas Guaranty Fund only protects policyholders of admitted insurers.
16.What is the term for the insurer that is not licensed but provides surplus
lines coverage?
Non-admitted insurer
This distinguishes them from admitted carriers licensed in Texas.
17.How must surplus lines agents maintain records of surplus lines
placements?
For at least 3 years
TDI requires records to be maintained for auditing purposes.
18.Can a surplus lines agent advertise non-admitted insurers?
Yes, if disclosures about non-admitted status are made
Consumers must know the insurance is not covered by standard regulatory
protections.
19.What is the purpose of a surplus lines placement notice?
To inform the insured the policy is with a non-admitted insurer
Disclosure ensures transparency and consumer protection.
20.Surplus lines insurance is generally used for which type of business?
Businesses with unique, high-risk, or large exposures
These risks cannot easily be placed with admitted carriers.
21.Who pays the surplus lines tax?
The surplus lines agent collects it from the insured and remits to TDI
The agent acts as a collector on behalf of the state.
