What is surplus lines insurance primarily designed for?

Surplus lines insurance is primarily designed for insuring risks that may be difficult to place with traditional insurers. This type of insurance caters specifically to those risks that are either high risk or not typically covered by standard insurance policies. It often covers unique or unusual situations that fall outside the standard market's appetite.

In the context of this question, option B accurately reflects this concept because surplus lines insurance is intended to cover risks that are located or to be performed in a particular state, especially when conventional insurers cannot provide coverage for those specific risks. It allows for more flexibility and availability of coverage for non-standard risks, without being subjected to the regulation or licensing requirements of admitted insurers.

Other options, while they may relate to forms of insurance, do not encapsulate the essence of what surplus lines insurance is about. For example, option A focuses on residential insurance, which typically falls under standard forms of coverage. Option C pertains to insurance for governmental entities, which usually relies on different provisions, and option D limits the scope to health-related coverage, which is a narrow category not representative of the broader range of risks that surplus lines can address.