The Idaho Legislature passed, and the Governor signed into law amendments to the Idaho surplus line law to be compliant with the NRRA effective on or after July 21, 2011.
The amendments limit Idaho’s surplus line law to apply only when the insured’s home state is Idaho.
Idaho is the insured’s home state if the insured’s principal place of business is maintained in or, in the case of an individual, the individual’s principal residence is in Idaho.
If 100% of the insured risk is located outside of Idaho, then the insured’s home state is the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
If more than one insured from an affiliated group is a named insured on a single nonadmitted insurance placement, Idaho will be considered the home state for that placement when Idaho is the home state of the member of the affiliated group having the largest percentage of premium attributed to it under such insurance contract.
The NRRA permits only the insured’s home state to require the payment of premium tax for nonadmitted insurance.
On and after July 21, 2011, the following process and tax rate will apply in Idaho:
(1) On or before the first day of March of each year each broker shall remit to the director a tax on the premiums, exclusive of sums collected to cover federal and state taxes and examination fees, on surplus line insurance subject to tax transacted by the broker with unauthorized insurers during the preceding calendar year as shown by the annual statement filed with the director, and at the rate of 1.5%. Such tax will be in lieu of all other taxes upon such insurers with respect to the business so reported.
(2) For property and casualty insurance other than worker’s compensation insurance, if Idaho is the insured’s home state, then the tax due will be computed based upon the entire premium, without regard to whether the policy covers risks or exposures that are located in Idaho. For all other lines of insurance, if a surplus line policy covers risks or exposures only partially in Idaho, the tax due will be based on premium that is properly allocable to the risks or exposures located in Idaho.
The insurance licensing information provided on this blog is not legal advice and the reader is advised to consult an attorney regarding application of this information in any particular situation.
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