What determines the amount of a surplus lines premium tax?

The amount of a surplus lines premium tax is determined by state law because each state has its own regulations governing the taxation of surplus lines insurance. Surplus lines insurance refers to policies that are not available through standard market insurers, and states impose these taxes as a way to manage and regulate this specific type of coverage. The rates can vary depending on the jurisdiction, reflecting state-specific decisions on how to handle surplus lines policies.

Federal law generally does not regulate surplus lines premium taxes since insurance is primarily overseen at the state level, and industry standards and market competition do not typically set tax rates. Instead, they may influence pricing and availability of insurance products but do not dictate legal tax obligations imposed by state governments.