Tax on Independently Procured Insurance
January 2007
Insurance procured from a non-licensed insurer where all of the negotiations occur outside of Texas is classified by statute as independently procured insurance. It is different from surplus lines insurance, which is placed through a licensed surplus lines agent who collects and remits the tax to the state.
A policyholder owes independently procured insurance tax on insurance policies and contracts negotiated outside Texas, that cover property or risks located in Texas, that have been obtained from an insurance company not licensed to do business in Texas if any contacts with Texas apply, including but not limited to:
- policies paid for in Texas;
- policies or other documents related to the policies that are issued or delivered in Texas;
- risk investigations or credit checks that are conducted in Texas prior to or subsequent to the issuance of the policies; and
- loss and claims adjustments, other investigations or payments that occur in Texas.
A policyholder should use form 25-103, Texas Annual Insurance Tax Report (Independently Procured Insurance), to report and pay this tax, which is due May 15 for policies of insurance effective in the previous calendar year.
Failure to pay tax due on independently procured insurance in a timely manner may subject the policyholder, the insurer and the agent to liability for unauthorized insurance tax. If the insurance company or agent does not pay this tax to Texas, the policyholder is liable. A policyholder should use form 25-108, Texas Annual Insurance Tax Report (Unauthorized Insurance), to report and pay this tax, which is due March 1 for policies of insurance effective during the previous calendar year.
Insurance forms are available on this Web site under Texas Insurance Tax Forms in our Tax Forms Online section.
For more information, call 1-800-252-1387, toll free nationwide, or in Austin 512/463-4600. You may also contact any Texas Comptroller's local field office.
98-376
(01/2007)