Does the Tax Rate Follow the Initial Policy Term in the Policy Extension Period?
The tax rate would apply to any additional premium generated as a result of the extension.
The tax rate would apply to any additional premium generated as a result of the extension.
At the time of filing his or her quarterly report with commissioner, each Surplus Lines Broker shall file a duplicate report and remit the premium tax due thereon to the Vermont Department of Taxes, Attn. Terry Edwards, 133 State Street, Montpelier, VT 05609-1401.
Gross premiums charged, less any return premiums, for surplus lines coverages placed with non-admitted insurers are subject to a premium receipts tax of three percent, which shall be collected from the insured by the Surplus Lines Broker at the time of delivery of policy or other confirmation of insurance, in addition to the full amount of the gross premium charged by the insurer for the insurance. The tax on any portion of the premium unearned at termination of insurance shall be returned to the policyholder by the surplus lines broker. Nothing contained in this section will preclude a Surplus Lines Broker from charging a fee to the purchaser of the contract sufficient to recover the amount of this tax.
Per SSAP No. 53, premium is defined as “…the contractually determined amount charged by the reporting entity to the policyholder for the effective period of the contract based upon the expectation of risk, policy benefits, and expenses associated with the coverage provided by the terms of the insurance contract." Per SSAP No. 53, premium is defined as “…the contractually determined amount charged by the reporting entity to the policyholder for the effective period of the contract based upon the expectation of risk, policy benefits, and expenses associated with the coverage provided by the terms of the insurance contract."
A Surplus Lines Broker should not be charging a policy fee for service that is already paid for by the receipt of commission by the broker as part of the sale. In instances where additional services are provided to the insured, a broker can charge a fee that is reasonable in relationship to the service provided. Vermont law requires a broker to obtain a prior written agreement with a client, policyholder, or other member of the public concerning the fees or charges made by that broker for that broker procuring, servicing, or providing advice on insurance contracts.