Are there any types of insurance policies that are tax exempt?
Yes, certain insurance premiums are considered to be exempt from the 2% surplus lines premium tax; however the premium volume must still be reported to the Department. Coverage for the operations of public political subdivisions (government entities such as counties, municipalities, school districts, etc.) is exempt from the premium tax. It is important to note that not all policies procured for public political subdivisions are tax exempt. For example, property coverage on a building that is owned by a university or liability coverage for a community-sponsored festival is not tax-exempt, but D&O or employment practices liability coverage would be tax-exempt. If you are unsure as to whether a policy qualifies for tax-exempt status, contact the Insurance Department for guidance.
