Taxes, Fees, & Assessments

According to Florida law (F.S. 626.932), the term “premium” means the consideration for insurance by whatever name called and includes:

• Any assessment,
• Any membership,
• Policy,
• Survey,
• Inspection,
• Service, or
• Similar fee or charge

in consideration for an insurance contract, which items are deemed to be a part of the premium.

The per-policy fee charged by the filing surplus lines agent and authorized by F.S. 626.916(4) is also included within the meaning of the term “premium.” 

However, the service fee imposed by F.S. 626.9325 is excluded from the meaning of the term “premium.”

In order to be exempt from surplus lines tax, the entity should be a governmental (state, county, municipality) entity. Non-profit 501(c)(3) organizations are typically exempt from sales tax but are not exempt from surplus lines tax unless proven otherwise by the entity and their filing surplus lines agent. 

Vessels, cargo, and aircraft risks as described under F.S. 626.917 are also exempt from the surplus lines tax. This exemption does not apply to boats or aircraft used solely for personal pleasure, family use, or the transportation of executives, employees, and guests of the insured.

Acceptable fees include a policy fee charged by the filing surplus lines agent, inspection fees, survey fees, membership fees, or similar fees charged in consideration for the insurance contract per F.S. 626.916. These fees are considered premium for taxation purposes. 

With the passage of House Bill 301, effective July 1, 2019, the $35 cap on the policy fee charged by the surplus lines agent was removed. A surplus lines agent may now charge a “reasonable” per-policy fee that still has to be reported to the FSLSO when making policy filings and will remain taxable. This fee must also be itemized separately to the insured before purchase and enumerated in the policy.

Further, a retail agent may charge a “reasonable” per-policy fee for surplus lines policies, which must also be itemized separately to the insured before purchase. The new retail agent fee statute does not explicitly include the fee in the definition of “taxable premium” and is not required to be enumerated on the policy.

Applicable coverage codes: 

• 1000 Commercial Property
• 1001 Builders Risk - Commercial
• 1003 Apartments - Commercial
• 1005 Commercial Package
• 1006 Condominium - Commercial
• 1017 Collateral Protection (force placed coverage)
• 2000 Homeowners-HO-1
• 2001 Homeowners-HO-2
• 2002 Homeowners-HO-3
• 2003 Homeowners-HO-4 - Tenant
• 2004 Homeowners-HO-5
• 2005 Homeowners-HO-6 - Condo Unit Owners
• 2006 Homeowners-HO-8
• 2007 Builders Risk - Residential
• 2009 Dwelling Property
• 2010 Farmowners Multi-Peril
• 2011 Mobile Homeowners

State and governmental entities are NOT exempt and therefore are also assessable.

All new and renewal policies effective prior to July 1, 2020, and any subsequent endorsements on those policies will still be taxed at the original rate of 5%.

For example, the tax rate for a policy effective January 1, 2020 is 5% of the gross premium. An additional premium endorsement effective July 1, 2020 would also be taxed at 5%. If the policy is cancelled effective August 1, 2020, the tax credit is 5% of the returned premium.

It does not affect multistate policies with effective dates prior to July 1, 2020.

Multistate policies where Florida is the home state will still be taxed at 5% for the Florida portion and the applicable state tax rate for the other states. 

For example, if you have a Florida home state policy effective on June 30, 2020, broken out as follows:

• Florida = $5,000
• Georgia = $2,000
• Alabama = $2,000

It would be reported in SLIP as: Florida = $5,000, Georgia = $2,000, and Alabama = $2,000.

Multistate policies where Florida is the home state will be taxed at 4.94% for the Florida portion and 4.94% for the rest of the states, as well. 

For example, if you have a Florida home state policy effective on July 2, 2020, broken out as follows:

• Florida = $5,000
• Georgia = $2,000
• Alabama = $2,000

It would be reported in SLIP as: Florida = $5,000 and Non-Florida = $4,000.