The Indiana surplus lines tax is 2.5% of gross premiums on any policy placed with a non-admitted carrier when Indiana is the insured’s home state. The licensed surplus lines producer collects the tax from the insured and remits it to the Indiana Department of Insurance by February 1 each year, covering all premiums procured during the prior calendar year.1Indiana General Assembly. Indiana Code 27-1-15.8-4 – Percent of Gross Premiums Remitted to Department The tax appears as a separate line item on the policy’s declarations page.
The 2.5% Rate and What It Applies To
The rate is a flat 2.5% of gross premiums, applied on top of the premium itself and any other charges or fees on the transaction.1Indiana General Assembly. Indiana Code 27-1-15.8-4 – Percent of Gross Premiums Remitted to Department Gross premiums means the base cost of the policy plus any additional charges from the non-admitted insurer. A $10,000 premium with a $500 policy fee produces a taxable base of $10,500 and a tax of $262.50. The declarations page must itemize premium, fees, and taxes separately.
When Indiana Is the Home State
Federal law decides which state gets to tax a surplus lines policy, and only the insured’s home state may do so. Indiana follows that rule.2Office of the Law Revision Counsel. 15 USC Chapter 108 – State-Based Insurance Reform Home state is the insured’s principal place of business, or for an individual, the principal residence. If 100% of the insured risk sits outside that state, the home state shifts to whichever state receives the largest share of the taxable premium. For an affiliated group on a single policy, the home state is that of the member with the largest premium allocation.3Office of the Law Revision Counsel. 15 USC 8206 – Definitions
When Indiana is the home state, Indiana collects the entire 2.5% tax on the full premium, no matter where the covered property or operations are located. Other states are preempted from applying their own surplus lines taxes to the same policy.4Office of the Law Revision Counsel. 15 USC 8202 – Regulation of Nonadmitted Insurance by Insured’s Home State
Filing Calendar
Producers have three separate filings tied to surplus lines business, and they run on different clocks.
Monthly Affidavits by the 20th
By the 20th of every month, a licensed surplus lines producer files an affidavit with the Department covering the prior calendar month’s transactions. The affidavit lists each policy procured with the insured’s details, the non-admitted insurer’s information, and a sworn statement that after diligent effort the coverage could not be obtained from an authorized Indiana insurer and that the placement was not made simply to get a lower rate than an admitted carrier would charge.1Indiana General Assembly. Indiana Code 27-1-15.8-4 – Percent of Gross Premiums Remitted to Department
Annual Tax Payment by February 1
The tax itself is paid once a year. By February 1, the producer remits 2.5% of gross premiums on all surplus lines policies procured during the 12-month period ending the prior December 31.1Indiana General Assembly. Indiana Code 27-1-15.8-4 – Percent of Gross Premiums Remitted to Department Monthly affidavits report the transactions; the annual filing pays the tax. Confusing the two is a common compliance mistake.
Annual Financial Statements by March 31
By March 31, the producer submits to the Department the December 31 financial statement for each unauthorized insurer used during the prior 12-month period.1Indiana General Assembly. Indiana Code 27-1-15.8-4 – Percent of Gross Premiums Remitted to Department
How to File and Pay
Indiana routes surplus lines tax filings and payments through OPTins, the NAIC’s electronic platform.5National Association of Insurance Commissioners. Indiana The Department of Insurance directs producers to OPTins for both the annual tax remittance and the monthly filings.6Indiana Department of Insurance. Surplus Lines Agent Licensing
Within the system, producers enter policy-level detail for each transaction: the insured’s legal name, policy number, the non-admitted insurer’s name and NAIC number, and the gross premium. OPTins calculates the 2.5% tax on reported totals and processes the payment electronically. Keep supporting documentation organized. The Department can request verification of gross premiums or home-state status at any point.
Penalties for Late Payment
Missing the February 1 deadline triggers an automatic 10% penalty on the unpaid tax. For every additional month or partial month the tax stays outstanding, the Department adds another 1% of the amount due.1Indiana General Assembly. Indiana Code 27-1-15.8-4 – Percent of Gross Premiums Remitted to Department On a $5,000 tax bill, the first day of delinquency adds $500, and each additional month tacks on another $50.
The penalty is the producer’s problem alone. The statute prohibits passing penalty charges through to the insured.1Indiana General Assembly. Indiana Code 27-1-15.8-4 – Percent of Gross Premiums Remitted to Department Late filing hits the producer’s own bottom line.
Two Boundaries Worth Knowing
Workers’ compensation is carved out of the home-state preemption. Other states can still regulate and tax surplus lines workers’ comp coverage placed within their borders, so a non-admitted workers’ comp policy can generate tax obligations in more than one state even if Indiana is the insured’s home state.4Office of the Law Revision Counsel. 15 USC 8202 – Regulation of Nonadmitted Insurance by Insured’s Home State
Exempt commercial purchaser status does not eliminate the tax. Large commercial buyers who meet the federal ECP criteria can bypass certain state-imposed diligent-search requirements at placement, but the 2.5% Indiana surplus lines tax still applies to their policies.7Office of the Law Revision Counsel. 15 USC 8206 – Definitions ECP is a placement shortcut, not a tax exemption.