January 1, 20XX
Mr. Joe Client
123 Main Street
SUBJECT: General Liability Policy
Dear Mr. Client:
Despite our efforts to place your coverage with an insurance company that is licensed in Texas, your policy will be placed through a surplus lines company. This company is different from a licensed company in several respects.
Surplus lines insurance companies must be approved by the Texas Department of Insurance to operate in Texas, but policies written through these companies are not protected by the state guaranty fund in the event the company becomes insolvent. The company we will place your coverage with is rated “___” (__________) by the A. M. Best Company.
In addition, surplus lines companies are not required to submit their policy forms to the Texas Department of Insurance for approval, so the coverage may not be as broad as that offered by a licensed insurance company.
Before we can issue your policy, we need for you to sign below, indicating that you understand and acknowledge your coverage may not be as broad as it has been in the past and that coverage will be placed through a surplus lines company. Please read your policy carefully when you receive it and call us if you have any questions.
Thank you for your business.
I acknowledge that I have reviewed this letter and understand that my insurance will not cover certain types of losses that may have been covered in the past, and that my coverage will be placed through a surplus lines company not subject to protection by the state guaranty fund.