1. 14231 POINTS
    Tom Sheehan
    Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
    Sometimes, if the insurance is provided by a carrier who is "non admitted" in your state through an excess lines market, states may impose a tax on those policy premiums. That tax is included in the total price you pay for the coverage along with any brokerage fee that may also be charged.
    Answered on November 26, 2014
  2. 2777 POINTS
    Terry A. McCarthy, CLU, ChFC
    President, Insurance Associates Agency Inc., West Chester, OH
    Premium taxes are generally never seen on a policy declaration page unless the carrier is a "surplus lines" insurance company.Surplus lines coverage is provided by a special agency type referred to as a "surplus lines agent" who acts as a wholesaler to retail agencies. The help non-admitted carriers manage their underwriting and administrative issues for the states where they except risk. The surplus lines agent deals with carriers who are not admitted to do business in a given state but they can also work with admitted carriers. The term "admitted" refers to the licensing process and a "non-admitted" carrier has not sought the approval of the state insurance department to provide insurance to residents and businesses of the state. When coverage is written by the non-admitted carrier, a tax is charged on the premium and fees charged by the surplus lines agency. That tax rate is 5% in Ohio. The surplus lines agent then remits the tax to the state where the risk is located. That is a part of their services. And, in answering the final part of your question, usually surplus lines tax applies to business risk but can also apply to personal lines. By the way, a non-admitted carrier is not included in the protections of the carrier insolvency protections of state statute so this is important to keep in mind when doing business with non-admitted carriers. Not being an "admitted" carrier in a state is not an indication of the solvency of the carrier or its ability to pay claims but it is important to mention that the protections of the law in your state may not help if a non-admitted carrier goes bankrupt in the same way as you have protection (in many instances) when an admitted carrier goes bankrup.
    Answered on July 9, 2015
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