Reviewed by Lee Benson, licensed Arizona broker. Updated October 26, 2026.
When might a business consider Arizona surplus-lines insurance?
A property or business that does not fit available authorized-market terms may need a surplus-lines review. Age, occupancy, losses or unusual operations can affect the search, but none automatically guarantees an E&S offer. The broker must follow the applicable placement requirements and explain the proposal; the market label does not tell you which particular losses are covered.
Arizona describes the placement conditions in A.R.S. §20-407, and §20-411 addresses broker licensing. DIFI’s insurer guidance identifies the recognized surplus-lines insurer categories. Start with commercial property insurance if a building has been declined, or open a specialty intake and describe the actual risk.
What differs between admitted and surplus-lines proposals?
Compare the insurer’s status and the policy terms separately. An admitted-market offer and a surplus-lines offer can differ in covered causes, exclusions, deductibles or conditions as well as price. Surplus-lines placement has a specific insolvency-protection limitation. Ask which insurer will issue the policy and how its eligibility was checked; a familiar brand or low premium is not enough.
| Review point | Authorized/admitted market | Surplus-lines market |
|---|---|---|
| Insurer status | Authorized for the applicable business | Eligible under the applicable surplus-lines pathway; domestic and other categories differ |
| Actual coverage | Forms and endorsements control | Forms and endorsements control; do not assume broader protection |
| Guaranty-fund treatment | Subject to applicable eligibility, exclusions and limits | Required notice says no insurance guaranty fund protection on insurer insolvency |
| Total price | Review quoted premium, taxes and fees | Review premium, surplus-lines tax and any disclosed fees separately |
| Binding | Follow insurer conditions and authorization | Follow insurer conditions, placement requirements and authorization |
A.R.S. §20-410 recognizes surplus-lines contracts as valid and enforceable and requires the insolvency notice. This does not guarantee that a particular claim is payable or that any insurer will remain solvent. Request the policy forms and ask questions before authorizing binding.
Which taxes and fees should the quote disclose?
Ask for the total amount due and an itemized explanation of premium, applicable taxes and fees. Arizona’s surplus-lines tax statute specifies a three-percent rate on the taxable base and describes inclusions and exclusions. Broker service fees have separate disclosure requirements. Do not calculate a final bill from the premium alone or assume every fee has the same treatment.
See A.R.S. §20-416 for the tax base and exceptions. Under §20-410, broker service fees and the specific services must be disclosed and agreed to in writing before coverage is effected. Confirm any current stamping fee on the actual quote; this guide does not publish an unverified rate or a proposed-law change.
What should you review before accepting an E&S offer?
Review the complete proposal with the broker before choosing solely on premium. Confirm the insured entity, locations, operations, values, limits and exclusions. Ask about cancellation, minimum-earned premium, inspection requirements and any conditions due after binding. A lender or contract may impose additional requirements; an insurance quotation is not evidence that those requirements have been accepted or satisfied.
- Covered property or activities, valuation, deductibles and key exclusions.
- Insurer name, eligibility, financial information and insolvency limitation.
- Total amount due, fees, payment terms and cancellation provisions.
- Inspection or safeguard conditions and lender or contract wording.
Start your Arizona specialty insurance intake. BrokerPro can review the risk and available market options; pricing, acceptance, coverage and binding remain subject to underwriting and the actual policy terms.