Does Florida's $4 emergency-management surcharge apply to a stand-alone commercial glass insurance policy?

Plain-English summary

The Florida Department of Revenue ruled that a monoline insurer did not have to collect the $4 emergency-management surcharge on its stand-alone commercial glass policy. The policy covered broken or chemically damaged glass incorporated into real property, with limited related items such as board-up and frame repair.

The surcharge applied to commercial fire, commercial multiple-peril, and business-owner property policies. The glass policy did not fit any of those categories and was reported as an allied-lines product classified as casualty insurance.

An optional endorsement for glass breakage caused by fire did not convert it into fire insurance because it covered only the broken glass, not broader fire damage such as scorching.

What this means for you

Specialty insurers

Classify the policy by its actual coverage, not merely by whether it protects property attached to real estate. A narrow monoline product may fall outside the listed surcharge categories.

Premium-tax teams

Retain policy forms, declarations, optional endorsements, and regulatory reporting classifications supporting the surcharge analysis.

Accountants and tax professionals

The ruling addresses the $4 surcharge and policy language then presented. Verify current section 252.372, Rule 12B-8.0012, and the exact policy form.

Common questions

Q: Why was the glass policy outside the surcharge?
A: It was not commercial fire, commercial multiple-peril, or a business-owner property policy.

Q: Did coverage of glass attached to real property make it taxable?
A: No. The policy category and scope controlled.

Q: What about optional fire coverage?
A: It covered only glass breakage caused by fire and did not create broader fire-property coverage.

Citations and references

• Fla. Stat. §§ 252.372, 624.505(1), and 213.22
• Fla. Admin. Code r. 12B-8.0012

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 18C1-010

Original ruling text

TAX: Insurance Premium Tax
TAA NUMBER:

18C1-010

ISSUE: Applicability of Insurance Policy Surcharge
STATUTE CITE(S): 252.372, F.S.
RULE CITE(S): 12B-8.0012, F.A.C.
QUESTION: ARE SUPPLEMENTTAL GLASS POLICIES WRITTEN BY TAXPAYER
SUBJECT TO THE INSURANCE POLICY SURCHAGE PER SECTION 252.372, FLORIDA
STATUTES?
ANSWER: BASED ON THE REPRESENTATION OF TAXPAYER, THE GLASS POLICIES
DO NOT MEET THE REQUIREMENT FOR APPLYING THE $4 SURCHARGE TO
POLICYHOLDERS.

August 9, 2018

Re:

Technical Assistance Advisement
Insurance Premium Tax
Applicability of Insurance Policy Surcharge
Sections 252.372, Florida Statutes (F.S.)
Rule 12B‐8.0012, Florida Administrative Code (F.A.C.)
XXXX (FEI# XXXX, hereinafter “Taxpayer”)

Dear XXXX:
This is in response to your request, dated April 3, 2018, for a Technical Assistance Advisement
(TAA) pursuant to section 213.22, F.S., and Rule Chapter 12‐11, F.A.C., regarding taxpayer’s
collection and remittance of the Insurance Policy Surcharge. An examination of your letter has
established that you have complied with the statutory and regulatory requirements for
issuance of a TAA. Therefore, the Department is hereby granting your request for a TAA.
FACTS SUPPLIED BY TAXPAYER

RECIPIENT NAME
August 9, 2018
Florida Department of Revenue
Page 2

Taxpayer states in its letter that it is a monoline glass insurance company domiciled in XXXX and
commercially domiciled in Florida. Taxpayer provides that it was licensed in Florida in 2000 as a
property and casualty insurer.
Taxpayer indicates that it markets the XXXX (“Glass Policy”), as a stand‐alone product that may
be used to supplement standard property policies sold by other insurers. Per the taxpayer,
about XX% of Taxpayer’s policies are written in southern Florida, and the Glass Policy is
purchased primarily by commercial residential condominium associations and commercial
storefronts. Taxpayer indicates that it covers broken and chemically‐damaged glass
incorporated into real property.
Taxpayer’s Request for Technical Assistance provides the following:


Rule 12B‐8.0012(3), F.A.C., states that that the $4 surcharge applies to each commercial
fire, commercial multiple peril, and business owner’s property insurance policy issued or
renewed on or after May 1, 1993, including marine policies if the coverages includes real
property. As the Glass Policy does not fall within the categories of insurance policies
enumerated in subsection (3), it does not appear that [Taxpayer] is required to bill,
collect, and remit the $4.00 surcharge.



Rule 12B‐8.0012(4), F.A.C., states that the surcharge does not apply to policies on
tangible personal property, except multiple peril type policies on residential or
commercial property and mobile homes. As the Glass Policy does not cover tangible
personal property, it does not appear that the exception enumerated in subsection (4),
applies to the Glass Policy.
LEGAL AUTHORITY

Section 252.372, F.S., states that:
Imposition and collection of surcharge.‐ In order to provide funds for emergency
management, preparedness, and assistance, an annual surcharge of $2 per policy shall
be imposed on every homeowners, mobile home owners, tenant homeowners, and
condominium unit owners policy, and an annual $4 surcharge shall be imposed on every
commercial fire, commercial multiple peril, and business owner’s property insurance
policy, issued or renewed on or after May 1, 1993. The surcharge shall be paid by the
policyholder to the insurer. The insurer shall collect the surcharge and remit it to the
Department of Revenue, which shall collect, administer, audit, and enforce the
surcharge pursuant to s. 624.5092. The surcharge is not to be considered premiums of
the insurer; however, nonpayment of the surcharge by the insured may be a valid
reason for cancellation of the policy. For those policies in which the surplus lines tax and
the service fee are collected and remitted to the Surplus Lines Service Office, as created

RECIPIENT NAME
August 9, 2018
Florida Department of Revenue
Page 3

under s. 626.921, the surcharge must be remitted to the service office at the same time
as the surplus lines tax is remitted. All penalties for failure to remit the surplus lines tax
and service fee are applicable for those surcharges required to be remitted to the
service office. The service office shall deposit all surcharges that it collects into the
Emergency Management, Preparedness, and Assistance Trust Fund at least monthly. All
proceeds of the surcharge shall be deposited in the Emergency Management,
Preparedness, and Assistance Trust Fund and may not be used to supplant existing
funding.
Rule 12B‐8.0012, F.A.C., states, in part, that:
(1) Every insurer must collect a surcharge of $2 and $4 from the policyholders of certain
types of property insurance issued or renewed.
(2) The $2 surcharge applies to each residential dwelling fire policy, homeowner’s,
mobile homeowner’s, tenant homeowner’s, condominium unit owner’s, and any other
type of insurance coverage on residential property.
(3) The $4 surcharge applies to each commercial fire, commercial multiple peril, and
business owner’s property insurance policy, including marine policies if the coverage
includes real property.
(4) The surcharge does not apply to policies on tangible personal property, except
multiple peril type policies on residential or commercial property and mobile homes.

DISCUSSION AND ANALYSIS
In 1993, the Florida Legislature decided to increase funding of the Emergency Management,
Preparedness, and Assistance Trust Fund through a surcharge on premiums written in Florida.
Chapter 252, F.S., imposes a $2 or $4 surcharge from the policyholders of certain types of
property insurance issued or renewed. The surcharge does not apply to policies of tangible
personal property, except multiple peril type policies on residential or commercial property and
mobile homes.
Taxpayer provides that it writes glass insurance policies in Florida, primarily to commercial
policyholders, and that the policies are reported to the National Association of Insurance
Commissioners (NAIC) under the Allied Lines classification. Glass insurance is classified as
“casualty insurance,” per Section 624.505(1), F.S. Per Rule 12B‐8.0012(3), F.A.C., “The $4
surcharge applies to each commercial fire, commercial multiple peril, and business owner’s
property insurance policy, including marine policies if the coverage includes real property.”
The NAIC website provides the following definitions for fire, commercial multiple peril and
business owners property insurance in its Glossary of Insurance Terms.

RECIPIENT NAME
August 9, 2018
Florida Department of Revenue
Page 4



Fire – coverage protecting the insured against the loss to real or personal property from
damage caused by the peril of fire or lightning, including business interruption, loss of
rents, etc.



Commercial Multiple Peril – policy that packages two or more insurance coverages
protecting an enterprise from various property and liability risk exposures. Frequently
includes fire, allied lines, various other coverages (e.g., difference in conditions), and
liability coverage. Such coverages would be included in other annual statement lines, if
written individually. Include under this type of insurance multi‐peril policies (other than
farmowners, homeowners, and automobile policies) that include coverage for liability
other than auto.



Business Owners Policy – business insurance typically for property, liability, and business
interruption coverage.

The Glass Policy indicates that it insures covered glass, as described on the declarations, against
loss due to “breakage” or “chemical damage.” “Breakage” is defined as (a) cracked or
shattered glass; (b) glass blown out of a frame and destroyed or lost; or (c) glass with holes in it;
but it does not include chipped, scratched or etched glass where only one surface is damaged.
“Chemical damage” is defined to mean damage immediately caused to a piece of glass by the
sudden application of acid or a caustic substance.
The Glass Policy indicates that it provides supplemental coverage per Sub‐Location for (a)
board‐up of openings, (b) replacing or repairing only the frames which held the glass that was
broken or chemically damaged, and (c) removing or replacing obstructions (other than window
displays) which prohibit the replacement of broken or chemically damaged glass.
Furthermore, Taxpayer indicates in its TAA request that the Glass Policy offers optional
coverage for lettering, tint, and alarm tape and optional coverage for the excluded period of
fire and graffiti. The option under the Glass Policy to cover glass breakage due to fire does not
cover damage caused by fire other than glass breakage (i.e., scorching).
Unless stated on the declarations as covered for an additional premium, the Glass Policy
indicates that the Taxpayer does not cover loss caused directly or indirectly by any of the
following, even if another cause contributes to the same loss: (a) Fire (unless purchased as an
optional coverage, as described above, and then only as to glass breakage); (b) Declared or
undeclared war, civil war, insurrection, rebellion, revolution, warlike act by a military force or
military personnel; destruction, seizure or use of property for a military purpose; or deliberate
or accidental discharge of a nuclear weapon; (c) Nuclear reaction, nuclear radiation or
radioactive contamination, whether controlled or uncontrolled; (d) Any act by or on behalf of

RECIPIENT NAME
August 9, 2018
Florida Department of Revenue
Page 5

any insured which is intended to cause loss; (e) Wear, tear, deterioration, obsolescence or
hidden or latent defects; or (f) Glass installed that did not meet: (1) Local building code
statutes, regulations, or ordinances effective at the time of installation; (2) The glass or frame
manufacturer’s requirements.
Taxpayer’s Glass Policy does not meet the definition of commercial fire, commercial multi‐peril
or business owner policy insurance per Rule 12B‐8.0012, F.A.C.
CONCLUSION
The Glass policy does not fall within the categories of insurance policies enumerated in Rule
12B‐8.0012(3) or (4), F.A.C. Taxpayer is not required to bill, collect and remit the $4 surcharge
per Section 252.372, F.S., on its Glass Policy.
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is
binding on the Department only under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is predicated on those facts and the
specific situation summarized above. You are advised that subsequent statutory or
administrative rule changes, or judicial interpretations of the statutes or rules, upon which this
advice is based, may subject similar future transactions to a different treatment than expressed
in this response.
You are further advised that this response, your request and related documents are public
records under Chapter 119, F.S., which are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Your name, address, and any other details, which might lead to
identification of the taxpayer, must be deleted before disclosure. In an effort to protect the
confidentiality of such information, we request you provide the undersigned with an edited
copy of your request for Technical Assistance Advisement, backup material and response within
fifteen days of the date of this advisement.

Sincerely,

William Roberts
Tax Law Specialist
Technical Assistance and Dispute Resolution
850‐717‐7658
ID Number: 65220