What does the surplus lines tax apply to?

The surplus lines tax specifically applies to surplus lines insurance transactions. This type of insurance is underwritten by non-admitted insurers, which are companies that are not licensed in the state where the insurance is being sold but are allowed to provide coverage under certain conditions. The surplus lines tax is imposed to ensure that these transactions adhere to state regulations and that the necessary taxes are collected on coverages that might not be available from admitted insurers.

Surplus lines insurance typically covers risks that are difficult to place in the standard market or that fall outside the coverage provided by licensed insurers. This can include specialized coverage types, high-risk operations, or industries that may not find adequate protection within the conventional insurance space.

Other types of insurance, such as all types of policies or only life insurance, don't specifically fall under the surplus lines tax framework, as the tax is tailored to transactions that involve non-admitted carriers. Similarly, commercial insurance transactions can encompass a variety of policies, but unless those transactions are specifically with surplus lines insurers, they would not be subject to the surplus lines tax.