A special lines' surplus line broker is a California license, created by Insurance Code section 1760.5, that authorizes the holder to place marine, aircraft, spacecraft, and interstate railroad insurance with non-admitted insurers. Unlike a regular surplus line broker, the holder skips the diligent search, files no SL forms, and owes no surplus lines premium tax.
You will run into this license if you place ocean cargo, hull, or aviation business in California, where much of the capacity sits in London and other foreign markets. The California Department of Insurance lists it as a distinct license type, and the statute itself is short enough to read in one sitting.
Special Lines' Surplus Line Broker
A California license under Insurance Code section 1760.5 authorizing placement of marine, aircraft, spacecraft, and interstate railroad insurance with non-admitted insurers, exempt from the diligent search requirement and the surplus lines premium tax.
What risks can a special lines' surplus line broker place?
Section 1760.5 draws the boundaries by subject matter, not by market conditions. Marine insurance is the big category: cargo in export or import trade, hull, protection and indemnity, marine builder's risk, ship repairer's liability, dry docks, and war risk. The statute expressly carves out bridges and tunnels, so a bridge builder's risk placement needs a regular surplus lines license even though the water underneath looks maritime.
The other two buckets are aircraft or spacecraft insurance and insurance on interstate railroad property and operations. These lines share a trait: the risks move across borders, admitted appetite is thin, and the working markets are often London syndicates and other foreign insurers. That is exactly why the legislature built them a separate door. If your placement does not fit one of these categories, the license does you no good.
How is it different from a regular surplus line broker?
Three exemptions do the work. First, no diligent search: a surplus lines broker must normally document admitted market declinations before going non-admitted, but Insurance Code section 1763 excuses special lines placements entirely, so no SL-1 or SL-2 ever gets filed with the stamping office. A reviewer at the Surplus Line Association never sees these placements at all.
Second, no tax. Section 1760.5(g) keeps the premium outside California's 3.0% surplus lines tax, a material saving on a seven figure hull account. Third, a smaller bond: $10,000 instead of the $50,000 a regular surplus line broker posts. Everything else about placing surplus lines insurance still applies, including the fact that non-admitted carriers sit outside the guaranty fund.
How do you get the license?
The prerequisites match the regular surplus lines license: you need active California Property and Casualty Broker-Agent licenses first. There is no separate examination for the special lines license itself, and the term runs two years. File through the CDI with the $10,000 bond and the application fee, and renew on the same cycle as your underlying licenses.
Who actually holds it? Brokers whose books are ocean marine, aviation, or railroad. A generalist E&S wholesaler rarely bothers, because the regular surplus lines license already covers those risks. The special lines version exists to strip the filing and tax friction from lines the admitted market never wrote anyway.
Frequently asked questions
Can a special lines' surplus line broker place general liability or property?
No. The license only covers marine (excluding bridges and tunnels), aircraft or spacecraft, and interstate railroad risks under Insurance Code section 1760.5. Any other non-admitted placement in California requires a regular surplus line broker license and its full filing and tax obligations.
Why is there no surplus lines tax on these placements?
Section 1760.5(g) exempts the premium from the 3% tax. These are mobile international risks, historically written through London and other foreign markets, and California chose not to burden them with the filing and tax machinery built for domestic E&S business.
Do I still need the regular surplus lines license too?
Only if you place non-admitted risks outside the three special lines categories. Many marine and aviation specialists hold both so a mixed account never stalls. The regular license needs a $50,000 bond, the special lines license only $10,000.
Where is the statute?
California Insurance Code section 1760.5, available at leginfo.legislature.ca.gov, with the diligent search exemption in section 1763. The California Department of Insurance licensing pages list the application requirements, bond amount, and two year term.
This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.
