Glossary

In the construction context, surcharge is where you place more of something than is natural; for example, they will add 20 feet of stone over a construction site to "surcharge" the soil underneath from the weight. This is a common term for adding more weight to the edge of an excavation where there was no weight before. These additional vertical loads or weights placed on the ground surface near an excavation can include spoil piles, equipment, vehicles, or other materials. The closer a surcharge load is to the edge of the excavation, the greater the potential for destabilizing the soil and causing a cave-in.

A surety guarantees the performance of another party by agreeing to stand in the place of its principal if the principal fails to do what it has promised to do. The contract through which the guarantee is executed is called a surety bond.

A surety bond is a contract under which one party (the surety) guarantees the performance of certain obligations of a second party (the principal) to a third party (the obligee).

Surplus is the amount by which an insurer's assets exceed its liabilities.

A surplus debenture is a debt instrument accounted for as equity under statutory accounting rules, used when investors loan surplus to an insurer rather than posting a letter of credit.

A surplus line refers to risks placed with nonadmitted insurers.

A surplus lines broker is a broker who is licensed to place coverage with nonadmitted insurers (insurers not licensed to do business in a given state). Most states require an agent to have a separate license to write surplus lines coverage. Normally, these licenses are held only by insurance brokers that work for surplus lines brokerages, which are firms that mainly place specialty lines coverage.

Surplus lines insurance refers to coverage lines that need not be filed with state insurance departments as a condition of being able to offer coverage.

Surplus notes describe the evidence of a loan to a captive to get additional capital into the captive.

Surplus reinsurance refers to reinsurance of amounts that exceed a ceding company's retention.