Vermont

GENERAL INFORMATION

  • Vermont does not maintain a list of eligible surplus lines insurers.
  • Vermont does not have a Surplus Lines Association.
  • Vermont does not have an Export List.
  • Vermont does have an industrial insured exemption (see Appendix C) which will remain in effect. Vermont’s new statute is silent on the definition of exempt commercial purchasers but the NRRA exempt commercial purchaser exemption is recognized in Vermont.
  • Surplus lines tax: 3%, paid quarterly by broker.
  • Vermont does allow domestic surplus lines insurers in the state.

ELIGIBILITY AND FILING REQUIREMENTS (ALL INSURERS)

NRRA restricts the eligibility requirements a state may impose on nonadmitted insurers. 15 U.S.C. § 8204. For nonadmitted insurers domiciled in a U.S. jurisdiction, broker is permitted to place nonadmitted insurance with such insurers provided they are authorized to write such business in their state of domicile and maintain minimum capital and surplus that equals the greater of (A) the minimum capital and surplus requirements under the Vermont law; or (B) $15,000,000.

For nonadmitted insurers domiciled outside the U.S., a broker may place business with such insurers provided the insurer is listed on the Quarterly Listing of Alien Insurers maintained by the International Insurers Department of the NAIC. Nonadmitted insurers are also subject to the minimum capital and surplus requirements outlined above.

TYPES OF INSURANCE EXEMPTED FROM SURPLUS LINES REGULATION

  • Insurance on property or operations of aircraft or railroads engaged in transportation in interstate and foreign commerce.
  • Insurance on vessels, crafts, or hulls, cargoes, marine builder’s risks, marine protection and indemnity or other risks including strikes and war risks commonly insured under ocean or wet marine forms of policy.
  • Industrial insurance.
    Note: For clarification, coverages noted above are generally exempt from most surplus lines regulation in Vermont — specifically procurement requirements, such as diligence. However, the exemption does not extend to the obligation to collect and pay taxes set out in Vt. Stat. Ann. Tit. 8, § 5035.

OTHER COMMENTS OR REQUIREMENTS

  • Bulletin 134 clarifies the Vermont DOI’s policy on whether surplus lines liability carriers must provide coverage for punitive as well as compensatory damages. The Vermont DOI allows surplus lines carriers to exclude punitive damages from surplus lines policies because that encourages the development of the surplus lines insurance market and the coverage of risks that would not otherwise be covered.
  • Each surplus lines broker through whom a surplus lines insurance coverage is procured shall endorse on the outside of the policy and on any confirmation of the insurance, his or her name, address and license number, and the name and address of the producer, if any, through whom the business originated. Where such coverage is placed with an eligible surplus lines insurer there shall be stamped or written conspicuously in no smaller than 10 point boldface type of a contrasting color upon the first page of the policy and the confirmation of insurance if any, “The company issuing this policy has not been licensed by the state of Vermont and the rates charged have not been approved by the commissioner of insurance. Any default on the part of the insurer is not covered by the Vermont Insurance Guaranty Association.”